590 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

FEDERAL TRADE COMMISSION 

16 CFR Part 463 

RIN 3084–AB72 

Combating Auto Retail Scams Trade 

Regulation Rule 

AGENCY: Federal Trade Commission. 

ACTION: Final rule. 

SUMMARY: The Federal Trade 

Commission (‘‘FTC’’ or ‘‘Commission’’) 

is issuing this Combating Auto Retail 

Scams Trade Regulation Rule (‘‘CARS 

Rule,’’ ‘‘Rule,’’ or ‘‘Final Rule’’) and 

Statement of Basis and Purpose (‘‘SBP’’) 

related to the sale, financing, and 

leasing of covered motor vehicles by 

covered motor vehicle dealers. The 

Final Rule, among other things, 

prohibits motor vehicle dealers from 

making certain misrepresentations in 

the course of selling, leasing, or 

arranging financing for motor vehicles, 

requires accurate pricing disclosures in 

dealers’ advertising and sales 

communications, requires dealers to 

obtain consumers’ express, informed 

consent for charges, prohibits the sale of 

any add-on product or service that 

confers no benefit to the consumer, and 

requires dealers to keep records of 

certain advertisements and customer 

transactions. 

DATES: This rule is effective July 30, 

2024. 

ADDRESSES: Copies of this document are 

available on the Commission’s website, 

www.ftc.gov. 

FOR FURTHER INFORMATION CONTACT: 

Daniel Dwyer or Sanya Shahrasbi, 

Division of Financial Practices, Bureau 

of Consumer Protection, Federal Trade 

Commission, 202–326–2957 (Dwyer), 

202–326–2709 (Shahrasbi), ddwyer@

ftc.gov, sshahrasbi@ftc.gov. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Background 

A. Statutory Authority 

B. Commission Actions Following the 

Dodd-Frank Act and the Rulemaking 

Process 

II. Motor Vehicle Financing and Leasing 

A. Overview of the Motor Vehicle 

Marketplace 

B. Deceptive and Unfair Practices in the 

Motor Vehicle Marketplace 

1. Bait-and-Switch Tactics 

2. Unlawful Practices Relating to Add-On 

Products or Services and Hidden Charges 

C. Law Enforcement and Other Responses 

III. Section-by-Section Analysis 

A. § 463.1: Authority 

B. § 463.2: Definitions 

1. Overview 

2. Definition-by-Definition Analysis 

(a) Add-On or Add-On Product(s) or 

Service(s) 

(b) Add-On List 

(c) Cash Price Without Optional Add-Ons 

(d) Clearly and Conspicuously 

(e) Motor Vehicle (finalized as ‘‘‘Covered 

Motor Vehicle’ or ‘Vehicle’ ’’) 

(f) Dealer or Motor Vehicle Dealer 

(finalized as ‘‘‘Covered Motor Vehicle 

Dealer’ or ‘Dealer’ ’’) 

(g) Express, Informed Consent 

(h) GAP Agreement 

(l) Government Charges 

(j) Material or Materially 

(k) Offering Price 

C. § 463.3: Prohibited Misrepresentations 

1. General Comments 

2. Paragraph-by-Paragraph Analysis of 

§ 463.3 

(a) The Costs or Terms of Purchasing, 

Financing, or Leasing a Vehicle 

(b) Any Costs, Limitation, Benefit, or Any 

Other Aspect of an Add-On Product or 

Service 

(c) Whether Terms Are, or Transaction Is, 

for Financing or a Lease 

(d) The Availability of Any Rebates or 

Discounts That Are Factored Into the 

Advertised Price but Not Available to All 

Consumers 

(e) The Availability of Vehicles at an 

Advertised Price 

(f) Whether Any Consumer Has Been or 

Will Be Preapproved or Guaranteed for 

Any Product, Service, or Term 

(g) Any Information on or About a 

Consumer’s Application for Financing 

(h) When the Transaction Is Final or 

Binding on All Parties 

(i) Keeping Cash Down Payments or Tradein Vehicles, Charging Fees, or Initiating 

Legal Process or Any Action If a 

Transaction Is Not Finalized or If the 

Consumer Does Not Wish To Engage in 

a Transaction 

(i) Keeping Cash Down Payments or Tradein Vehicles, Charging Fees, or Initiating 

Legal Process or Any Action If a 

Transaction Is Not Finalized or If the 

Consumer Does Not Wish To Engage in 

a Transaction 

(j) Whether or When a Dealer Will Pay Off 

Some or All of the Financing or Lease on 

a Consumer’s Trade-in Vehicle 

(k) Whether Consumer Reviews or Ratings 

Are Unbiased, Independent, or Ordinary 

Consumer Reviews or Ratings of the 

Dealer or the Dealer’s Products or 

Services 

(l) Whether the Dealer or Any of the 

Dealer’s Personnel or Products or 

Services Is or Was Affiliated With, 

Endorsed or Approved by, or Otherwise 

Associated With the United States 

Government or Any Federal, State, or 

Local Government Agency, Unit, or 

Department, Including the United States 

Department of Defense or Its Military 

Departments 

(m) Whether Consumers Have Won a Prize 

or Sweepstakes 

(n) Whether, or Under What 

Circumstances, a Vehicle May Be Moved, 

Including Across State Lines or Out of 

the Country 

(o) Whether, or Under What 

Circumstances, a Vehicle May Be 

Repossessed 

(p) Any of the Required Disclosures 

Identified in This Part 

D. § 463.4: Disclosure Requirements 

1. Overview 

2. Paragraph-by-Paragraph Analysis of 

§ 463.4 

(a) Offering Price 

(b) Add-On List 

(c) Add-Ons Not Required 

(d) Total of Payments and Consideration 

for a Financed or Lease Transaction 

(e) Monthly Payments Comparison 

E. § 463.5: Dealer Charges for Add-Ons and 

Other Items 

1. Overview 

2. Paragraph-by-Paragraph Analysis of 

§ 463.5 

(a) Add-Ons That Provide No Benefit 

(b) Undisclosed or Unselected Add-Ons 

(c) Any Item Without Express, Informed 

Consent 

F. § 463.6: Recordkeeping 

G. § 463.7: Waiver Not Permitted 

H. § 463.8: Severability 

I. § 463.9: Relation to State Laws 

IV. Effective Date 

V. Paperwork Reduction Act 

A. Add-On List Disclosures 

B. Disclosures Relating to Cash Price 

Without Optional Add-Ons 

C. Prohibited Misrepresentations and 

Required Disclosures 

D. Recordkeeping 

E. Capital and Other Non-Labor Costs 

1. Disclosures 

2. Recordkeeping 

VI. Regulatory Flexibility Act 

A. Significant Impact Analysis 

1. Comments on Significant Impact 

2. Certification of the Final Rule 

(a) Industry Averages 

(b) Dealer Size Based on the Number of 

Employees 

B. Initial and Final Regulatory Flexibility 

Analysis 

1. Comments on the Initial Regulatory 

Flexibility Analysis 

(a) Description of the Reasons Why Action 

by the Agency Is Being Considered 

(b) Succinct Statement of the Objectives of, 

and Legal Basis for, the Proposed Rule 

(c) Description of and, Where Feasible, 

Estimate of the Number of Small Entities 

to Which the Proposed Rule Will Apply 

(d) Description of the Projected Reporting, 

Recordkeeping, and Other Compliance 

Requirements of the Proposed Rule 

(e) Duplicative, Overlapping, or Conflicting 

Federal Rules 

(f) Description of Any Significant 

Alternatives to the Proposed Rule Which 

Accomplish the Stated Objectives of 

Applicable Statutes and Which 

Minimize Any Significant Economic 

Impact of the Proposed Rule on Small 

Entities 

2. Final Regulatory Flexibility Analysis 

(a) Statement of the Need for, and 

Objectives of, the Rule 

(b) Issues Raised by Comments, Including 

Comments by the Chief Counsel for 

Advocacy of the SBA, the Commission’s 

Assessment and Response, and Any 

Changes Made as a Result 


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Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 591 

1Public Law 111–203, 124 Stat. 1376 (2010). 

2 12 U.S.C. 5519(d). See 12 U.S.C. 5519(f)(1) and 

(2) for definitions of the terms ‘‘motor vehicle’’ and 

‘‘motor vehicle dealer’’ under section 1029 of the 

Dodd-Frank Act, respectively. 

3See 12 U.S.C. 5519(a) (discussing the authority 

over ‘‘motor vehicle dealer[s] that [are] 

predominantly engaged in the sale and servicing of 

motor vehicles, the leasing and servicing of motor 

vehicles, or both’’); 12 U.S.C. 5519(d) 

(‘‘Notwithstanding section 57a of title 15, the 

Federal Trade Commission is authorized to 

prescribe rules under sections 45 and 57a(a)(1)(B) 

of title 15[ ] in accordance with section 553 of title 

5, with respect to a person described in subsection 

(a).’’); 5 U.S.C. 553. Because the Commission has 

authority to promulgate this Rule in accordance 

with the APA, it is not required to include a 

statement as to the prevalence of the acts or 

practices treated by the Rule under section 18(d) of 

the FTC Act. Compare 12 U.S.C. 5519(d) and (a) 

(providing the FTC with APA rulemaking authority 

for purposes of section 1029 of the Dodd-Frank 

Act), with 15 U.S.C. 57a(b)(3) (requiring a statement 

as to prevalence for certain rulemaking proceedings 

by the Commission under non-APA procedures), 

and 15 U.S.C. 57a(b)(1) (establishing that certain 

rulemaking proceedings by the Commission under 

non-APA procedures are subject to requirements in 

addition to those under the APA). 

4See 12 U.S.C. 5411(a). 

5 76 FR 14014, 14015 (Mar. 15, 2011). 

6See Fed. Trade Comm’n, ‘‘The Road Ahead: 

Selling, Financing & Leasing Motor Vehicles’’ (Apr. 

12, 2011), https://www.ftc.gov/news-events/events/ 

2011/04/road-ahead-selling-financing-leasingmotor-vehicles (providing materials from 

roundtable in Detroit, Michigan); Fed. Trade 

Comm’n, ‘‘The Road Ahead: Selling, Financing & 

Leasing Motor Vehicles’’ (Aug. 2, 2011), https://

www.ftc.gov/news-events/events/2011/08/roadahead-selling-financing-leasing-motor-vehicles 

(providing materials from roundtable in San 

Antonio, Texas); Fed. Trade Comm’n, ‘‘The Road 

Ahead: Selling, Financing & Leasing Motor 

Vehicles’’ (Nov. 17, 2011), https://www.ftc.gov/ 

news-events/events/2011/11/road-ahead-sellingfinancing-leasing-motor-vehicles (providing 

materials from roundtable in Washington, District 

of Columbia). 

7As used herein, references to the ‘‘Statement of 

Basis and Purpose’’ or ‘‘SBP’’ refer to the portions 

of this document that precede the regulatory text of 

the Final Rule. References to the ‘‘Rule,’’ ‘‘Final 

Rule,’’ or ‘‘CARS Rule’’ refer to the text in part 

463—Combating Auto Retail Scams (‘‘CARS’’) 

Trade Regulation Rule. Because the Final Rule is 

narrower than the proposed Motor Vehicle Dealers 

Trade Regulation Rule in the NPRM, the 

Commission has modified the Rule title to reflect 

the more limited scope. 

8See Press Release, Fed. Trade Comm’n, ‘‘FTC 

Proposes Rule to Ban Junk Fees, Bait-and-Switch 

Tactics Plaguing Car Buyers’’ (June 23, 2022), 

https://www.ftc.gov/news-events/news/pressreleases/2022/06/ftc-proposes-rule-ban-junk-feesbait-switch-tactics-plaguing-car-buyers. 

9See Fed. Trade Comm’n, Notice of Proposed 

Rulemaking, Motor Vehicle Dealers Trade 

Regulation Rule, 87 FR 42012 (released June 23, 

2022; published July 13, 2022) [hereinafter NPRM], 

https://www.govinfo.gov/content/pkg/FR-2022-07- 

13/pdf/2022-14214.pdf. 

10The Commission received 27,349 comment 

submissions filed online in response to its NPRM. 

See Gen. Servs. Admin., Dkt. No. FTC–2022–0046, 

Proposed Rule, Motor Vehicle Dealers Trade 

Regulation Rule (July 13, 2022), https://

www.regulations.gov/document/FTC-2022-0046- 

0001 (noting comments received). To facilitate 

public access, over 11,000 such comments have 

been posted publicly on Regulations.gov at https:// 

www.regulations.gov/document/FTC-2022-0046- 

0001/comment (noting posted comments). As 

explained at Regulations.gov, agencies may choose 

to redact or withhold certain submissions (or 

portions thereof) such as those containing private 

or proprietary information, inappropriate language, 

or duplicate/near duplicate examples of a massmail campaign. See Gen. Servs. Admin., 

Regulations.gov Frequently Asked Questions, Find 

Dockets, Documents, and Comments FAQs, ‘‘How 

are comments counted and posted to 

Regulations.gov?,’’ https://www.regulations.gov/ 

faq?anchor=downloadingdata (last visited Dec. 5, 

2023). The Commission has considered all timely 

and responsive public comments it received in 

response to its NPRM. 

11See, e.g., Individual commenter, Doc. No. FTC– 

2022–0046–4648 (‘‘As a young Marine stationed in 

Continued 

(c) Description and Estimate of the Number 

of Small Entities to Which the Final Rule 

Will Apply or an Explanation of Why No 

Such Estimate Is Available 

(d) Description of the Projected Reporting, 

Recordkeeping, and Other Compliance 

Requirements 

(e) Description of the Steps the 

Commission Has Taken To Minimize the 

Significant Economic Impact on Small 

Entities Consistent With the Stated 

Objectives of Applicable Statutes 

VII. Final Regulatory Analysis Under Section 

22 of the FTC Act 

A. Introduction 

B. Estimated Benefits of Final Rule 

1. Consumer Time Savings When Shopping 

for Motor Vehicles 

2. Reductions in Deadweight Loss 

3. Framework 

4. Estimation 

5. Benefits Related to More Transparent 

Negotiation 

C. Estimated Costs of Final Rule 

1. Prohibited Misrepresentations 

2. Required Disclosure of Offering Price in 

Advertisements and in Response to 

Inquiry 

3. Disclosure of Add-On List and 

Associated Prices 

4. Required Disclosure of Total of 

Payments for Financing/Leasing 

Transactions 

5. Prohibition on Charging for Add-Ons 

that Provide No Benefit 

6. Requirement to Obtain Express, 

Informed Consent Before Any Charges 

7. Recordkeeping 

D. Other Impacts of Final Rule 

E. Conclusion 

F. Appendix: Derivation of Deadweight 

Loss Reduction 

G. Appendix: Uncertainty Analysis 

VIII. Other Matters 

I. Background 

A. Statutory Authority 

The Dodd-Frank Wall Street Reform 

and Consumer Protection Act (‘‘DoddFrank Act’’) was signed into law in 

2010.1 Section 1029 of the Dodd-Frank 

Act authorizes the FTC to prescribe 

rules with respect to unfair or deceptive 

acts or practices by motor vehicle 

dealers.2 The FTC is authorized to do so 

under the FTC Act and in accordance 

with section 553 of the Administrative 

Procedure Act (‘‘APA’’).3 The grant of 

APA rulemaking authority set forth in 

section 1029 of the Dodd-Frank Act 

became effective as of July 21, 2011— 

the designated ‘‘transfer date’’ 

established by the Treasury 

Department.4

B. Commission Actions Following the 

Dodd-Frank Act and the Rulemaking 

Process 

Following enactment of the DoddFrank Act, the Commission published in 

the Federal Register a notice discussing 

its authority to prescribe rules with 

respect to unfair or deceptive acts or 

practices by motor vehicle dealers and 

announcing that it would be hosting a 

series of public roundtables to explore 

consumer protection issues pertaining 

to motor vehicle sales and leasing, 

including what consumer protection 

issues, if any, exist that could be 

addressed through a possible 

rulemaking.5 The Commission sought 

participation from regulators, consumer 

advocates, industry participants, and 

other interested parties and ultimately 

held three such public roundtables.6

The Commission subsequently 

focused on enforcement and business 

guidance in the motor vehicle dealer 

marketplace. As discussed in SBP II.C,7

however, certain unfair and deceptive 

acts or practices have persisted, despite 

more than a decade of enforcement and 

education. Accordingly, on June 23, 

2022, the Commission announced a 

notice of proposed rulemaking 

(‘‘NPRM’’) addressing unfair or 

deceptive acts or practices by motor 

vehicle dealers.8 That notice was 

published in the Federal Register on 

July 13, 2022.9 The NPRM, among other 

things, proposed to (i) prohibit motor 

vehicle dealers from making certain 

misrepresentations, (ii) require accurate 

pricing disclosures, (iii) prohibit the 

sale of any add-on product or service 

that confers no benefit to the consumer, 

(iv) require express, informed consent 

for add-ons and other charges, and (v) 

impose certain recordkeeping 

requirements. The comment period for 

the NPRM closed on September 12, 

2022. 

In response to the NPRM and 

proposed rule, the Commission received 

more than 27,000 comments from 

stakeholders representing a wide range 

of viewpoints.10 These stakeholders 

included numerous individual 

consumers who described deceptive 

practices during recent car purchases 

and many who discussed current or 

former military service and deceptive 

and predatory practices common near 

military installations.11 Commenters 


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592 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

a military town I was taken advantage of by a 

dealership when purchasing my first car. It set me 

back financially for years. I know of many young 

military people who purchased vehicle[ ]s and 

we[ ]re instantly so far upside down after leaving 

the dealership with thousands of dollars in add on 

junk charges . . . .’’); Individual commenter, Doc. 

No. FTC–2022–0046–0542 (‘‘As a former member of 

the Military, the amount of scams and horror stories 

I have heard regarding young service members 

buying cars is absurd. . . . Someone shouldn’t 

have to do hours of research on how to buy a car 

so they don’t get taken advantage of.’’); Individual 

commenter, Doc. No. FTC–2022–0046–0637 (‘‘As a 

small business owner and active duty military 

member I have played the role of both a buyer, 

toiling for hours to just reach fair deals on vehicles, 

as well as that of an advocate for my Sailors who 

have been preyed upon by local dealerships. 

Nowhere else in our society do so many average 

citizens have to mentally prepare for a battle over 

fair pricing and treatment for something that is 

realistically a modern necessity.’’); Individual 

commenter, Doc. No. FTC–2022–0046–9840 (‘‘I 

can’t list the number of times I have either seen, or 

have stepped in a situation, where car dealers have 

either attempted to take, or have successfully taken, 

advantage of a young military member or their 

family by baiting and switching when it came to the 

price of a car, or stated that the price was one 

amount, only to be charged, and over-charged a 

higher amount. These dealers have even attempted 

to pull unethical tricks on me and my wife, even 

after they found out that I was a military member, 

a combat veteran, that was serving this great 

nation.’’); Individual commenter, Doc. No. FTC– 

2022–0046–0845 (‘‘Predatory practices like [baitand-switch pricing] are common near military 

installations . . . .’’). 

12 Industry commenters claimed that many of the 

areas covered by the proposed rule are already 

addressed in industry guidance. The Commission 

notes that, although industry guidance can provide 

helpful information to dealers, dealers who choose 

not to follow such guidance, or who engage in 

deceptive or unfair practices, subject their 

customers to significant harm. The Rule addresses 

such practices, thus protecting consumers and lawabiding dealers. 

13Unless otherwise indicated, the terms ‘‘auto,’’ 

‘‘automobile,’’ ‘‘car,’’ ‘‘motor vehicle,’’ and 

‘‘vehicle,’’ as used in this SBP and the 

Commission’s final regulatory analysis, refer to 

‘‘Covered Motor Vehicle’’ as defined in this part. 

14 During 2017 to 2022, an average of 91% of 

American workers who did not work from home 

drove to work. See U.S. Census Bureau, ‘‘American 

Community Survey: Means of Transportation to 

Work by Selected Characteristics, 2022: ACS 1-Year 

Estimates Subject Tables’’ (2023), https://data.

census.gov/table?q=Commuting&tid=

ACSST1Y2022.S0802 (reporting 110,245,368 

workers 16 years and over who drove alone to work 

in a car, truck, or van, and 13,881,067 workers 16 

years and over who drove by carpool to work in a 

car, truck or van, together accounting for 91% of the 

total of 136,196,004 workers 16 years and over who 

did not work from home); U.S. Census Bureau, 

‘‘American Community Survey: Means of 

Transportation to Work by Selected Characteristics, 

2021: 2017–2021 ACS 5-Year Estimates Subject 

Tables’’ (2022), https://data.census.gov/ 

table?q=Commuting&tid=ACSST5Y2021.S0802 

(reporting 113,724,271 workers 16 years and over 

who drove alone to work in a car, truck, or van, and 

13,340,838 workers 16 years and over who drove by 

carpool to work in a car, truck or van, together 

accounting for 91% of the total of 140,223,271 

workers 16 years and over who did not work from 

home). 

15Nat’l Auto. Dealers Ass’n, ‘‘NADA Data 2022’’ 

7, https://www.nada.org/media/4695/download

?inline (noting average retail selling price of 

$46,287 for new vehicles sold by dealerships in 

2022). 

16 Id. at 10 (noting average retail selling price of 

$30,736 for used vehicles sold by new-vehicle 

dealerships in 2022). 

17Lydia DePillis, ‘‘How the Costs of Car 

Ownership Add Up,’’ N.Y. Times (Oct. 6, 2023), 

https://www.nytimes.com/interactive/2023/10/07/ 

business/car-ownership-costs.html (citing average 

monthly payment figures from TransUnion). 

18 Id. (citing data from AAA and the U.S. Census 

Bureau). 

19Bureau of Econ. Analysis, ‘‘National Data: 

National Income and Product Accounts, Personal 

Consumption Expenditures by Major Type of 

Product’’ tbl. 2.3.5, https://apps.bea.gov/iTable/ 

?reqid=19&step=2&isuri=1&categories=survey

#eyJhcHBpZCI6MTksInN0ZXBzIjpbMSwyLDNd

LCJkYXRhIjpbWyJjYXRlZ29yaWVzIiwiU3VydmV5I

l0sWyJOSVBBX1RhYmxlX0xpc3QiLCI2NSJdXX0= 

(last revised July 27, 2023) (listing estimated annual 

expenditure rates of between $713.1 billion and 

$737.1 billion in 2022). 

20Melinda Zabritski, Experian Info. Sols., Inc., 

‘‘State of the Automotive Finance Market Q4 2020’’ 

5, https://www.experian.com/content/dam/ 

marketing/na/automotive/quarterly-webinars/ 

credit-trends/2020-quarterly-trends/v2-2020-q4-

state-automotive-market.pdf (on file with the 

Commission). 

21Fed. Rsrv. Bank of N.Y., ‘‘Quarterly Report on 

Household Debt and Credit, 2023: Q1’’ 3–4 (May 

2023), https://www.newyorkfed.org/medialibrary/ 

interactives/householdcredit/data/pdf/HHDC_

2023Q1; Fed. Rsrv. Bank of N.Y., ‘‘Data Underlying 

Report’’ on ‘‘Page 3 Data’’ and ‘‘Page 4 Data’’ tabs, 

https://www.newyorkfed.org/medialibrary/ 

interactives/householdcredit/data/xls/HHD_C_

Report_2023Q1 (last visited Dec. 5, 2023) (listing 

number of open ‘‘Auto Loan’’ accounts and total 

outstanding balance in such accounts). 

22Fed. Rsrv. Bank of N.Y., ‘‘Quarterly Report on 

Household Debt and Credit, 2023: Q1’’ 3, 21 (May 

2023), https://www.newyorkfed.org/medialibrary/ 

interactives/householdcredit/data/pdf/HHDC_

2023Q1; Fed. Rsrv. Bank of N.Y., ‘‘Data Underlying 

Report’’ on ‘‘Page 3 Data’’ and ‘‘Page 21 Data’’ tabs, 

https://www.newyorkfed.org/medialibrary/ 

interactives/householdcredit/data/xls/HHD_C_

Report_2023Q1 (last visited Dec. 5, 2023) (listing 

total ‘‘Auto Loan’’ debt balance compared to other 

product type categories). 

23See Consumer Fin. Prot. Bureau, ‘‘Financially 

Fit? Comparing the Credit Records of Young 

Servicemembers and Civilians’’ 27 (July 2020), 

https://files.consumerfinance.gov/f/documents/ 

cfpb_financially-fit_credit-young-servicememberscivilians_report_2020-07.pdf. 

also included dealerships and their 

employees, industry groups, consumer 

and community groups, and Federal and 

State lawmakers and law enforcement 

agencies. Many commenters, such as 

consumers, some dealers and dealer 

employees, consumer groups, and 

lawmakers and enforcers, were 

supportive of the proposed rule in 

whole or in part. Many of these 

commenters also urged the FTC to 

include additional protections for 

consumers and law-abiding businesses, 

while others, such as industry groups, 

dealers, and dealer employees, asked 

questions or criticized the proposal.12

These comments and responses to 

comments are discussed primarily in 

the discussion of the Final Rule in SBP 

III. 

The Commission notes that it has 

undertaken careful review and 

consideration of each of the comments 

it received in response to its NPRM. The 

Commission has dedicated the majority 

of its section-by-section analysis to 

descriptions of, and responses to, 

comments or portions thereof that were 

critical of the Commission’s proposal or 

that urged the Commission to adopt 

additional requirements. Thus, to 

ensure that this document also reflects 

the many comments in the public record 

from stakeholders who supported the 

proposal as is, the Commission has 

excerpted a number of such comments 

in portions of its SBP. 

II. Motor Vehicle Financing and 

Leasing 

A. Overview of the Motor Vehicle 

Marketplace 

For many consumers, buying or 

leasing a motor vehicle is essential, 

expensive, and time-consuming.13

Americans rely on their vehicles for 

work, school, childcare, groceries, 

medical visits, and many other 

important tasks in their daily lives.14

These vehicles have become 

increasingly costly: the average price of 

a new vehicle sold at a new car 

dealership in 2022 was more than 

$46,000,15 while the average price of a 

used vehicle sold at such dealerships 

was more than $30,000.16 By the second 

quarter of 2023, the average monthly 

payment for used cars reached $533, 

and the average monthly payment for 

new cars reached $741—both record 

highs.17 Vehicles are now many 

consumers’ largest expense—on a par 

with housing, child care and food, and 

accounting for 16% of the median 

annual household income before 

taxes.18 In 2022 alone, Americans spent 

more than $720 billion on motor 

vehicles and vehicle parts.19

Given these costs, many consumers 

who purchase a motor vehicle rely on 

financing to complete their purchases. 

According to public reports, 81% of 

new motor vehicle purchases, and 

nearly 35% of used vehicle purchases, 

are financed.20 By the first quarter of 

2023, Americans had more than 107 

million outstanding auto financing 

accounts and owed more than $1.56 

trillion thereon,21 making auto finance 

the third-largest source of debt for U.S. 

consumers, and the second-largest for 

U.S. consumers ages 40 and over.22

Servicemembers have an average of 

twice as much auto debt as civilians— 

particularly young servicemembers, 

who generally require vehicles for 

transportation while living on military 

bases.23 By the age of 24, around 20 


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24See Consumer Fin. Prot. Bureau, ‘‘Protecting 

Servicemembers from Costly Auto Loans and 

Wrongful Repossessions’’ (July 18, 2022), https://

www.consumerfinance.gov/about-us/blog/ 

protecting-servicemembers-from-costly-auto-loansand-wrongful-repossessions/. 

25Mary W. Sullivan, Matthew T. Jones & Carole 

L. Reynolds, Fed. Trade Comm’n, ‘‘The Auto Buyer 

Study: Lessons from In-Depth Consumer Interviews 

and Related Research’’ 15 (July 2020) [hereinafter 

Auto Buyer Study], https://www.ftc.gov/system/ 

files/documents/reports/auto-buyer-study-lessonsdepth-consumer-interviews-related-research/ 

bcpreportsautobuyerstudy.pdf (noting that the 

purchase transactions in the FTC’s qualitative study 

often took 5 hours or more to complete, with some 

extending over several days); Cf. Cox Auto., ‘‘2020 

Cox Automotive Car Buyer Journey’’ 6 (2020) 

[hereinafter 2020 Cox Automotive Car Buyer 

Journey], https://b2b.autotrader.com/app/uploads/ 

2020-Car-Buyer-Journey-Study.pdf (reporting 

average consumer time spent shopping for a vehicle 

at 14 hours, 53 minutes); Cox Auto., ‘‘2022 Car 

Buyer Journey: Top Trends Edition’’ 6 (2023) 

[hereinafter 2022 Car Buyer Journey], https://

www.coxautoinc.com/wp-content/uploads/2023/01/ 

2022-Car-Buyer-Journey-Top-Trends.pdf (reporting 

average consumer time spent shopping for a vehicle 

at 14 hours, 39 minutes). 

26For example, consumers have complained 

about going to a dealership based on an offer that 

the dealer refuses to honor only after they have 

spent hours driving there and additional time on 

the lot. See, e.g., Complaint ¶¶ 23–26, Fed. Trade 

Comm’n v. N. Am. Auto. Servs., Inc., No. 1:22–cv– 

0169 (N.D. Ill. Mar. 31, 2022) (alleging that many 

consumers drive hours to dealerships based on the 

advertised prices; that test-driving and selecting a 

vehicle, and negotiating the price and financing 

terms, is an often hours-long process; and that, after 

this time, dealers falsely told consumers that addon products or packages were required to purchase 

or finance the vehicle, even though they were not 

included in the low prices advertised or disclosed 

to consumers who called to confirm prices). 

27Unless otherwise indicated, the terms ‘‘dealer,’’ 

‘‘dealership,’’ and ‘‘motor vehicle dealer’’ as used 

in this SBP and the Commission’s final regulatory 

analysis refer to ‘‘ ‘Covered Motor Vehicle Dealer’ or 

‘Dealer’ ’’ as defined in this part. 

28See Nat’l Auto. Dealers Ass’n, ‘‘Dealer-Assisted 

Financing Benefits Consumers,’’ https://

www.nada.org/autofinance/[https://

web.archive.org/web/20220416131718/https://

www.nada.org/autofinance/] (Apr. 16, 2022) (noting 

that 7 out of 10 consumers finance through their 

dealership). This is also known as ‘‘dealer 

financing,’’ because consumers obtain financing 

through the dealer that partners with other entities 

in the financing process. 

29 Dealers often originate the contract governing 

the extension of retail credit or retail leases and 

then sell, or otherwise assign, these contracts to 

unaffiliated third-party finance or leasing sources, 

including such third parties the dealer may have 

contacted in the course of arranging dealerprovided ‘‘indirect’’ financing. See Consumer Fin. 

Prot. Bureau, ‘‘Automobile Finance Examination 

Procedures’’ 3 (Aug. 2019), https://files.consumer

finance.gov/f/documents/201908_cfpb_automobilefinance-examination-procedures.pdf. 

30See Nat’l Auto. Dealers Ass’n, Nat’l Ass’n of 

Minority Auto. Dealers & Am. Int’l Auto. Dealers 

Ass’n, ‘‘Fair Credit Compliance Policy & Program’’ 

2 (2015), https://www.nada.org/media/4558/ 

download?inline. (defining ‘‘buy rate’’ as ‘‘the rate 

at which the finance source will purchase the credit 

contract from the dealer’’). 

31See, e.g., id. at 1 n.4 & accompanying text. 

32 Id. (describing this as the amount dealers earn 

for arranging financing, measured as the difference 

between the consumer’s annual percentage rate 

(‘‘APR’’) and the wholesale ‘‘buy rate’’ at which a 

finance source buys the finance contract from the 

dealer, and noting that finance sources typically 

permit dealers to retain the dealer participation). 

33Nat’l Auto. Dealers Ass’n, ‘‘Average Dealership 

Profile’’ 1 (2020), https://www.nada.org/media/ 

4136/download?attachment[http://web.archive.org/ 

web/20220623204158/https://www.nada.org/ 

media/4136/download?attachment] (June 23, 2022). 

34Nat’l Indep. Auto. Dealers Ass’n, ‘‘NIADA Used 

Car Industry Report 2020’’ 21 (2020). 

35 Id. at 8, 10. 

36Melinda Zabritski, Experian Info. Sols., Inc., 

‘‘State of the Automotive Finance Market Q2 2020’’ 

8 (2020), https://www.experian.com/content/dam/ 

marketing/na/automotive/quarterly-webinars/ 

credit-trends/2020-q2-safm-final.pdf [http://

web.archive.org/web/20201106002015/https://

www.experian.com/content/dam/marketing/na/ 

automotive/quarterly-webinars/credit-trends/2020- 

q2-safm-final.pdf] (Mar. 6, 2023). 

37Consumer Fin. Prot. Bureau, ‘‘Automobile 

Finance Examination Procedures’’ 4 (Aug. 2019), 

https://files.consumerfinance.gov/f/documents/ 

201908_cfpb_automobile-finance-examinationprocedures.pdf. 

38Consumer Fin. Prot. Bureau, ‘‘Consumer Voices 

on Automobile Financing’’ 5 (June 2016), https://

files.consumerfinance.gov/f/documents/201606_

cfpb_consumer-voices-on-automobile-financing.pdf. 

39Melinda Zabritski, Experian Info. Sols., Inc., 

‘‘State of the Automotive Finance Market Q4 2020’’ 

26 (2020), https://www.experian.com/content/dam/ 

marketing/na/automotive/quarterly-webinars/ 

credit-trends/2020-quarterly-trends/v2-2020-q4- 

state-automotive-market.pdf [http://

web.archive.org/web/20210311174922/https://

www.experian.com/content/dam/marketing/na/ 

automotive/quarterly-webinars/credit-trends/2020- 

quarterly-trends/v2-2020-q4-state-automotivemarket.pdf] (Mar. 6, 2023). 

40See Fed. Trade Comm’n, ‘‘Financing or Leasing 

a Car,’’ https://www.consumer.ftc.gov/articles/0056- 

financing-or-leasing-car (last visited Dec. 5, 2023) 

(‘‘The annual mileage limit in most standard leases 

is 15,000 or less.’’); Consumer Fin. Prot. Bureau, 

‘‘What should I know about the differences between 

leasing and buying a vehicle?,’’ https://

www.consumerfinance.gov/ask-cfpb/what-should-iknow-about-the-differences-between-leasing-andbuying-a-vehicle-en-815/ (last visited Aug. 24, 2023) 

(‘‘Most leases restrict your mileage to 10,000–15,000 

miles per year.’’). 

percent of young servicemembers have 

at least $20,000 in auto debt, which 

equates to nearly two-thirds of an 

enlisted soldier’s typical base salary at 

that age.24

In addition to the expense, the 

process of buying or leasing a vehicle is 

often time-consuming and arduous. It 

can take several hours or days to finalize 

a transaction,25 on top of the hours it 

can take, particularly in rural areas, to 

drive to a dealership.26 Consumers may 

need to take time off work or arrange 

childcare, and families with a single 

vehicle may be forced to delay other 

important appointments due to the 

length of the vehicle-buying or -leasing 

process. 

Most consumers—approximately 

70%—finance vehicle purchases 

through a motor vehicle dealer,27 using 

what is known as dealer-provided 

‘‘indirect’’ financing.28 This financing is 

typically offered through dealers’ 

financing and insurance (‘‘F&I’’) offices, 

which may also offer leasing and addon products or services. In the dealerprovided financing scenario, the dealer 

collects financial information about the 

consumer and forwards that information 

to prospective motor vehicle financing 

entities. These financing entities 

evaluate this information and, in the 

process, determine whether, and on 

what terms, to provide credit.29 These 

terms include the ‘‘buy rate’’: a riskbased finance charge that reflects the 

interest rate at which the entity will 

finance the deal.30 Dealers often add a 

finance charge called a ‘‘dealer reserve’’ 

or ‘‘markup’’ to the buy rate.31 Unlike 

the buy rate, the markup is not based on 

the underwriting risk or credit 

characteristics of the applicant, and 

dealers retain the markup as profit.32

New vehicle dealers average a gross 

profit of about $2,444 per vehicle,33

more than half of which comes from the 

dealers’ F&I offices. Independent used 

vehicle dealers averaged a gross profit of 

more than $6,000 per vehicle, as of 

2019.34 While some used vehicle 

dealerships do not have a separate F&I 

office, more than half of such 

dealerships sell add-on products.35

Six to eight percent of financed 

vehicle purchases use what is called 

‘‘buy here, pay here’’ dealers.36 In this 

scenario, consumers typically borrow 

from, and make their payments directly 

to, the dealership. 

The remainder of financed vehicle 

transactions use what is commonly 

referred to as ‘‘direct’’ financing, 

provided by a credit union, bank, or 

other financing entity.37 In this scenario, 

consumers typically receive an interest 

rate quote from the financing entity 

prior to arriving at a dealership to 

purchase a vehicle, and use the 

financing to pay for their chosen 

vehicle.38 Dealerships do not profit on 

the financing portion of the vehicle sale 

transaction when a consumer arranges 

financing directly. 

Finally, consumers may choose to 

lease a vehicle from a dealership rather 

than purchase one. In this scenario, 

consumers may drive a vehicle for a set 

period of time—typically around three 

years 39—and for a certain maximum 

number of miles—typically 10,000– 

15,000 miles per year—in exchange for 

an upfront payment, a monthly 

payment, and fees before, during, and at 

the end of the lease, including for excess 

wear and usage over the mileage limit.40

When consumers lease a vehicle, they 

do not own it, and they must return the 

vehicle when the lease expires, though 

they may have the option to purchase 


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41Melinda Zabritski, Experian Info. Sols., Inc., 

‘‘State of the Automotive Finance Market Q4 2020’’ 

5 (2020), https://www.experian.com/content/dam/ 

marketing/na/automotive/quarterly-webinars/ 

credit-trends/2020-quarterly-trends/v2-2020-q4- 

state-automotive-market.pdf [https://

www.experian.com/content/dam/marketing/na/ 

automotive/quarterly-webinars/credit-trends/2020- 

quarterly-trends/v2-2020-q4-state-automotivemarket.pdf] (Mar. 6, 2023). 

42See Fed. Trade Comm’n, ‘‘FTC Policy 

Statement on Deception’’ 2, 5, 103 F.T.C. 174 (1984) 

[hereinafter FTC Policy Statement on Deception] 

(appended to Cliffdale Assocs., Inc., 103 F.T.C. 110, 

183 (1984)), https://www.ftc.gov/system/files/ 

documents/public_statements/410531/831014

deceptionstmt.pdf. 

43 Id. 

44 15 U.S.C. 45(n). 

45See, e.g., Fed. Trade Comm’n, ‘‘Consumer 

Sentinel Network Data Book 2022’’ app. B3 at 85 

(Feb. 2023) [hereinafter Consumer Sentinel Network 

Data Book 2022], https://www.ftc.gov/system/files/ 

ftc_gov/pdf/CSN-Data-Book-2022.pdf (reporting 

complaints about new and used motor vehicle sales, 

financing, service & warranties, and rentals & 

leasing, collectively, of more than 100,000 in 2020, 

2021, and 2022); Fed. Trade Comm’n, ‘‘Consumer 

Sentinel Network Data Book 2021’’ app. B3 at 85 

(Feb. 2022) [hereinafter Consumer Sentinel Network 

Data Book 2021], https://www.ftc.gov/system/files/ 

ftc_gov/pdf/CSN%20Annual%20Data%20

Book%202021%20Final%20PDF.pdf (reporting 

complaints about new and used motor vehicle sales, 

financing, service & warranties, and rentals & 

leasing, collectively, of more than 100,000 in 2019, 

2020, and 2021). 

46According to commenters, complaints to the 

Better Business Bureau about new and used auto 

dealers, when combined, have been either the first 

or second highest regarding any industry in the U.S. 

for the past twenty years. See Comment of Nat’l 

Consumer L. Ctr. et al., Doc. No. FTC–2022–0046– 

7607 at ii; see also Better Bus. Bureau, ‘‘BBB 

Complaint and Inquiry Statistics,’’ https://

www.bbb.org/all/bbb-complaint-statistics (last 

visited Dec. 5, 2023) (listing complaint statistics 

from 2010 through 2022, sorted by industry). In 

addition, for the past seven years annual surveys of 

State and local consumer protection agencies have 

reported that auto-related complaints were the top 

complaint received from consumers. See Comment 

of Nat’l Consumer L. Ctr. et al., Doc. No. FTC–2022– 

0046–7607 at 13; Consumer Fed’n of Am., ‘‘2022 

Consumer Complaint Survey Report’’ 4–5 (May 

2023), https://consumerfed.org/wp-content/ 

uploads/2023/05/2022-Consumer-ComplaintSurvey-Report.pdf (‘‘For the seventh year in a row, 

auto sales, leases and repairs are the #1 complaint 

category. Consumers filed complaints about add-on 

products and services, bait and switch pricing, and 

mechanical condition issues.’’). 

47See Consumer Sentinel Network Data Book 

2021, supra note 45, at 8 (listing vehicle-related 

complaints as the seventh most common report 

category, outside of identity theft, in 2021); 

Consumer Sentinel Network Data Book 2022, supra 

note 45, at 8 (listing motor vehicle-related 

complaints as the fifth most common report 

category, outside of identity theft, in 2022). 

48See Consumer Sentinel Network Data Book 

2021, supra note 45, at 18 (listing vehicle-related 

complaints as the eighth most common complaint 

category for military consumers, outside of identity 

theft categories, in 2021); Consumer Sentinel 

Network Data Book 2022, supra note 45, at 18 

(listing vehicle-related complaints as the ninth most 

common complaint category for military 

consumers, outside of identity theft categories, in 

2022). 

49See, e.g., United States v. Brien, 617 F.2d 299, 

308 (1st Cir. 1980); United States v. Offs. Known as 

50 State Distrib. Co., 708 F.2d 1371, 1374–75 (9th 

Cir. 1983); Keith B. Anderson, Fed. Trade Comm’n, 

‘‘Consumer Fraud in the United States: An FTC 

Survey’’ 80 (2004), https://www.ftc.gov/sites/ 

default/files/documents/reports/consumer-fraudunited-states-ftc-survey/040805confraudrpt.pdf 

(staff report noting consumers who reported they 

were victims of fraud complained to an official 

source only 8.4 percent of the time, filing 

complaints with the BBB in 3.5 percent of incidents 

and to a Federal agency, including the FTC, in only 

1.4 percent of cases). 

50See Complaint, Fed. Trade Comm’n v. N. Am. 

Auto. Servs., Inc., No. 1:22–cv–0169 (N.D. Ill. Mar. 

31, 2022); see also WardsAuto, ‘‘WardsAuto 2020 

Megadealer 100,’’ https://www.wardsauto.com/ 

dealers/wardsauto-2020-megadealer-100-industryforce (last visited Dec. 5, 2023) (listing Napleton 

Automotive Group as the 13th-ranked dealership 

group by total revenue). 

51Complaint ¶ 27, Fed. Trade Comm’n v. N. Am. 

Auto. Servs., Inc., No. 1:22–cv–0169 (N.D. Ill. Mar. 

31, 2022) (alleging that defendants buried charges 

for add-ons in voluminous paperwork, making them 

difficult to detect); see Press Release, Fed. Trade 

Comm’n, ‘‘FTC Returns Additional $857,000 To 

Consumers Harmed by Napleton Auto’s Junk Fees 

and Discriminatory Practices’’ (Nov. 20, 2023), 

https://www.ftc.gov/news-events/news/pressreleases/2023/11/ftc-returns-additional-857000- 

consumers-harmed-napleton-autos-junk-feesdiscriminatory-practices. 

52For example, in a recent action involving 

deceptive pre-approval claims, the FTC had 

received roughly 30 complaints about the 

company’s pre-approval conduct in the five-year 

period prior to announcing its action. But in the 

five months following announcement of the action, 

more than 900 additional consumers came forward 

with complaints about the conduct. See Press 

Release, Fed. Trade Comm’n, ‘‘FTC Announces 

Claims Process for Consumers Harmed by Credit 

Karma ‘Pre-Approved’ Offers for Which They Were 

Denied’’ (Dec. 5, 2023), https://www.ftc.gov/newsevents/news/press-releases/2023/12/ftc-announcesclaims-process-consumers-harmed-credit-karmapre-approved-offers-which-they-were (‘‘[W]ithin 

five months of that announcement, the agency 

received nearly 900 more such complaints’’). 

53While other issues exist in the motor vehicle 

sales, financing, and leasing space, including issues 

involving discrimination, financing application 

falsification, data privacy and security, and yo-yo 

financing, this Rule’s core focus is on 

misrepresentations and add-on and pricing 

practices. 

the vehicle at the end of the lease 

period. Nearly 27% of new vehicles are 

leased, as are just over 8% of used 

vehicles.41

B. Deceptive and Unfair Practices in the 

Motor Vehicle Marketplace 

Section 5 of the Federal Trade 

Commission Act (‘‘FTC Act’’), as 

amended (15 U.S.C. 45), authorizes the 

FTC to address deceptive or unfair acts 

or practices in or affecting commerce, 

including in the motor vehicle 

marketplace. 

An act or practice is deceptive if there 

is a representation, omission, or other 

practice that is likely to mislead 

consumers acting reasonably under the 

circumstances and is material to 

consumers—that is, it is likely to affect 

consumers’ conduct or decisions with 

regard to a product or service.42

Deceptive conduct can involve omission 

of material information, the disclosure 

of which is necessary to prevent the 

claim, practice, or sale from being 

misleading.43

An act or practice is considered unfair 

under section 5 of the FTC Act if: (1) it 

causes, or is likely to cause, substantial 

injury to consumers; (2) the injury is not 

reasonably avoidable by consumers; and 

(3) the injury is not outweighed by 

countervailing benefits to consumers or 

to competition.44

In each of the past four years, the FTC 

received more than 100,000 complaints 

regarding motor vehicle sales, financing, 

service and warranties, and rentals and 

leasing.45 This industry is also 

consistently at or near the top of private 

sources of consumer complaints.46

Many of these complaints concerned 

deceptive or unfair acts or practices 

affecting U.S. consumers. Complaints 

about motor vehicle transactions are 

regularly in the top ten complaint 

categories tracked by the FTC.47 For 

military consumers as well, auto-related 

complaints are among the top 10 

complaint categories outside of identity 

theft.48

Moreover, law enforcement 

experience shows that complaints are 

just the tip of the iceberg.49 The 

Commission’s recent enforcement action 

against a large, multistate dealership 

group is illustrative of this point in the 

motor vehicle marketplace: in that 

matter, the Commission received 391 

complaints—about add-ons and other 

issues—over a several-month period 

prior to filing a complaint against the 

thirteenth largest dealership group in 

the country by revenue as of 2020.50

However, in a survey of the dealer’s 

customers over the same time period, 

83% of respondents—or at least 16,848 

customers—indicated they were subject 

to the dealer’s unlawful practices 

related to add-ons alone.51

Similarly, in other contexts where 

companies were charged with making 

misrepresentations or engaging in 

misconduct regarding add-on products, 

information obtained after filing has 

shown widespread harm far beyond the 

initial consumer complaint volumes 

reported prior to filing.52

As examined in greater detail in the 

paragraphs that follow, consumers in 

the motor vehicle marketplace are 

confronted with chronic deceptive or 

unfair practices, including bait-andswitch tactics and hidden charges.53

1. Bait-and-Switch Tactics 

Advertisements for motor vehicles are 

often consumers’ first contact in the 

vehicle-buying or -leasing process. 

Dealers utilize a variety of means to 


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54Nat’l Auto. Dealers Ass’n, ‘‘NADA Data 2022’’ 

15, https://www.nada.org/media/4695/download?

inline (listing average dealership advertising per 

new vehicle sold of $718 in 2022, and $602 in 

2021). 

55 Id. at 16 (listing 68.2% of estimated advertising 

expenditures by medium as internet expenditures). 

56See, e.g., Complaint, Timonium Chrysler, Inc., 

No. C–4429 (F.T.C. Jan. 28, 2014) (alleging 

dealership advertised internet prices and dealer 

discounts that were only available through rebates 

not applicable to the typical consumer); Complaint, 

Ganley Ford West, Inc., No. C–4428 (F.T.C. Jan. 28, 

2014) (alleging dealership advertised discounts on 

vehicle prices, but failed to disclose that discounts 

were only available on the most expensive models); 

Complaint, Progressive Chevrolet Co., No. C–4578 

(F.T.C. June 13, 2016) (alleging deceptive failure to 

disclose material conditions of obtaining the lease 

monthly payment in their online and print 

advertising); Complaint ¶¶ 38–46, Fed. Trade 

Comm’n v. Tate’s Auto Ctr. of Winslow, Inc., No. 

3:18–cv–08176–DJH (D. Ariz. July 31, 2018) 

(alleging that company issued advertisements for 

attractive terms but concealed that the terms were 

only applicable to lease offers); Complaint ¶¶ 36– 

38, United States v. New World Auto Imports, Inc., 

No. 3:16–cv–02401–K (N.D. Tex. Aug. 18, 2016) 

(alleging misrepresentation that terms were for 

financing instead of leasing); Complaint ¶¶ 85–87, 

Fed. Trade Comm’n v. Universal City Nissan, Inc., 

No. 2:16–cv–07329 (C.D. Cal. Sept. 29, 2016) 

(alleging that dealerships claimed consumers could 

finance the purchase of vehicles with attractive 

terms and buried disclosures indicating that such 

terms were applicable to leases only). 

57Complaint ¶¶ 82–84, Fed. Trade Comm’n v. 

Universal City Nissan, Inc., No. 2:16–cv–07329 

(C.D. Cal. Sept. 29, 2016) (alleging 

misrepresentation that dealer would pay off a 

consumer’s trade-in when in fact consumers were 

still responsible for outstanding debt on trade-in 

vehicles); Complaint ¶¶ 17–19, TXVT Ltd. P’ship, 

No. C–4508 (F.T.C. Feb. 12, 2015) (alleging 

misrepresentation in leasing advertising that the 

dealership would pay off the negative equity of a 

consumer’s trade in vehicle, when in fact, it was 

merely rolled into the financed amount for the 

consumer’s newly financed vehicle). 

58See, e.g., Complaint ¶¶ 12, 17–19, Traffic Jam 

Events, LLC, No. 9395 (F.T.C. Aug. 7, 2020); 

Complaint ¶¶ 4, 7–9, Fowlerville Ford, Inc., No. C– 

4433 (F.T.C. Feb. 20, 2014). 

59See, e.g., Complaint ¶¶ 25, 27–28, Fed. Trade 

Comm’n v. N. Am. Auto. Servs., Inc., No. 1:22–cv– 

0169 (N.D. Ill. Mar. 31, 2022). 

60See Ben Eisen, ‘‘Car Dealer Markups Helped 

Drive Inflation, Study Finds,’’ Wall St. J., Apr. 23, 

2023, https://www.wsj.com/articles/car-dealermarkups-helped-drive-inflation-study-finds7c1d5a2d; U.S. Bureau of Labor Statistics, 

‘‘Automotive Dealerships 2019–2022: Dealer 

Markup Increases Drive New-Vehicle Consumer 

Inflation’’ (Apr. 2023), https://www.bls.gov/opub/ 

mlr/2023/article/automotive-dealershipsmarkups.htm. 

61See Nat’l Consumer L. Ctr., ‘‘Auto Add-ons 

Add Up: How Dealer Discretion Drives Excessive, 

Arbitrary, and Discriminatory Pricing’’ (Oct. 1, 

2017), https://www.nclc.org/images/pdf/car_sales/ 

report-auto-add-on.pdf; Adam J. Levitin, ‘‘The Fast 

and the Usurious: Putting the Brakes on Auto 

Lending Abuses,’’ 108 Geo. L.J. 1257, 1265–66 

(2020), https://www.law.georgetown.edu/ 

georgetown-law-journal/wp-content/uploads/sites/ 

26/2020/05/Levitin_The-Fast-and-the-UsuriousPutting-the-Brakes-on-Auto-Lending-Abuses.pdf 

(discussing ‘‘loan packing’’ as the sale of add-on 

products that are falsely represented as being 

required in order to obtain financing); Complaint 

¶¶ 12–19, Fed. Trade Comm’n v. Liberty Chevrolet, 

Inc., No. 1:20–cv–03945 (S.D.N.Y. May 21, 2020) 

(alleging deceptive and unauthorized add-on 

charges in consumers’ transactions); Complaint 

¶¶ 59–64, Fed. Trade Comm’n v. Universal City 

Nissan, Inc., No. 2:16–cv–07329 (C.D. Cal. Sept. 29, 

2016) (alleging deceptive and unauthorized add-on 

charges in consumers’ transactions); Complaint 

¶¶ 6, 9, TT of Longwood, Inc., No. C–4531 (F.T.C. 

July 2, 2015) (alleging misrepresentations regarding 

prices for added features); see also Auto Buyer 

Study, supra note 25, at 14 (‘‘Several participants 

who thought that they had not purchased add-ons, 

or that the add-ons were included at no additional 

charge, were surprised to learn, when going through 

the paperwork, that they had in fact paid extra for 

add-ons. This is consistent with consumers’ 

experiencing fatigue during the buying process or 

confusion with a financially complex transaction, 

but would also be consistent with dealer 

misrepresentations.’’). 

62Consumers for Auto Reliability and Safety, 

Comment Letter on Motor Vehicle Roundtables, 

Project No. P104811 at 2–3 (Apr. 1, 2012), https:// 

www.ftc.gov/sites/default/files/documents/public_

comments/public-roundtables-protectingconsumers-sale-and-leasing-motor-vehicles-projectno.p104811-00108/00108-82875.pdf (citing a U.S. 

Department of Defense data call summary that 

found that the vast majority of military counselors 

have clients with auto financing problems and cited 

‘‘loan packing’’ and yo-yo financing as the most 

frequent auto lending abuses affecting 

servicemembers). 

63Complaint ¶¶ 17–19, Fed. Trade Comm’n v. 

Liberty Chevrolet, Inc., No. 1:20–cv–03945 (S.D.N.Y. 

May 21, 2020); Complaint ¶ 60, Fed. Trade Comm’n 

v. Universal City Nissan, Inc., No. 2:16–cv–07329 

(C.D. Cal. Sept. 29, 2016); Carole L. Reynolds & 

Stephanie E. Cox, Fed. Trade Comm’n, ‘‘Buckle Up: 

Navigating Auto Sales and Financing’’ (2020) 

[hereinafter Buckle Up], https://www.ftc.gov/ 

reports/buckle-navigating-auto-sales-financing. 

64See, e.g., Buckle Up, supra note 63, at 10–11 

(noting the long, complex transaction process); 

Complaint ¶¶ 23–28, Fed. Trade Comm’n v. N. Am. 

Auto. Servs., Inc., No. 1:22–cv–01690 (N.D. Ill. Mar. 

31, 2022) (same). 

65Complaint ¶ 24, Fed. Trade Comm’n v. N. Am. 

Auto. Servs., Inc., No. 1:22–cv–01690 (N.D. Ill. Mar. 

31, 2022); see also Buckle Up, supra note 63, at 10– 

11. 

reach consumers, including social 

media and online advertisements, 

television and radio commercials, and 

direct mail marketing. New vehicle 

dealers spend an average of more than 

$700 on advertising per vehicle 

sold 54—more than two-thirds of which 

goes toward online advertising.55

The FTC has brought many law 

enforcement actions involving motor 

vehicle dealers’ deceptive advertising 

and other unlawful tactics. Such actions 

have charged dealers with, inter alia, 

making misrepresentations regarding 

the price of a vehicle, the availability of 

discounts and rebates, the monthly 

payment amount for a financed 

purchase or lease, the amount due at 

signing, and whether an offer pertains to 

a purchase or a lease.56 Other such 

actions have charged dealers with 

misrepresentations regarding whether 

the dealer or consumer is responsible 

for paying off ‘‘negative equity,’’ i.e., the 

outstanding debt on a vehicle that is 

being ‘‘traded in’’ as part of another 

vehicle purchase.57 And in other FTC 

actions, some dealers have lured 

potential buyers through financial 

incentives incidental to the purchase, 

such as deceptive promises of a valuable 

prize that is redeemable only by visiting 

the dealership.58

Deceptive tactics can cause significant 

consumer harm and impede 

competition, competitively 

disadvantaging law-abiding dealers. 

When dealerships advertise prices, 

discounts, or other terms that are not 

actually available to typical consumers, 

consumers who select that dealership 

instead of others spend time visiting the 

dealership or otherwise interacting with 

the dealership under false pretenses. 

2. Unlawful Practices Relating to AddOn Products or Services and Hidden 

Charges 

Another key consumer protection 

concern is the sale of add-on products 

or services in a deceptive or unfair 

manner. Add-ons in connection with 

the sale or financing of motor vehicles 

include extended warranties, service 

and maintenance plans, payment 

programs, guaranteed automobile or 

asset protection (‘‘GAP’’) agreements, 

emergency road service, VIN etching 

and other theft protection devices, and 

undercoating. Individual add-ons can 

cost consumers thousands of dollars and 

can significantly increase the overall 

cost to the consumer in the 

transaction.59 Moreover, in the past two 

years, dealers have substantially 

increased prices for these add-ons, 

notwithstanding that such products or 

services largely are not constrained by 

supply.60

A significant consumer protection 

concern is consumers paying for addons without knowing about, or 

expressly agreeing to, these products or 

services.61 This type of payment 

packing has been a particular concern in 

the military community.62 The 

protracted and paperwork-heavy 

vehicle-buying or -leasing process can 

make it difficult for consumers to spot 

add-on charges, particularly when 

advertised prices or payment terms do 

not mention add-ons.63 If consumers are 

financing or leasing the vehicle, they 

undergo a separate financing process 

after selecting a vehicle, which can 

include wading through a thick stack of 

dense paperwork filled with fine 

print.64 For example, according to an 

FTC law enforcement action, consumers 

visiting one large dealership group were 

required to complete a stack of 

paperwork that ran more than sixty 

pages and required more than a dozen 

signatures.65 This paperwork can 

include hidden charges for add-on 

products or services, causing consumers 


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596 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

66Complaint ¶¶ 25, 27, 29–32, Fed. Trade 

Comm’n v. N. Am. Auto. Servs., Inc., No. 1:22–cv– 

01690 (N.D. Ill. Mar. 31, 2022); see also Complaint 

¶¶ 17–19, Fed. Trade Comm’n v. Liberty Chevrolet, 

Inc., No. 1:20–cv–03945 (S.D.N.Y. May 21, 2020); 

Dale Irwin, Slough Connealy Irwin & Madden LLC, 

Comment Letter on Public Roundtables: Protecting 

Consumers in the Sale and Leasing of Motor 

Vehicles, Project No. P104811, Submission No. 

558507–00060 (Dec. 29, 2011), https://

www.regulations.gov/comment/FTC-2022-0036- 

0051 (consumer protection lawyer noting ‘‘payment 

packing’’ among problems ‘‘that cry out for scrutiny 

and regulation’’); Michael Archer, Comment Letter 

on Public Roundtables: Protecting Consumers in the 

Sale and Leasing of Motor Vehicles, Project No. 

P104811, Submission No. 558507–00041 at 3 (Aug. 

6, 2011), https://www.regulations.gov/comment/ 

FTC-2022-0036-0014 (workshop panelist stating, ‘‘I 

have seen cases wherein the dealer uses financing 

to pack in extra costs or to wipe out trade-in 

value.’’); Dawn Smith, Comment Letter on Public 

Roundtables: Protecting Consumers in the Sale and 

Leasing of Motor Vehicles, Project No. P104811, 

Submission No. 558507–00027 (July 27, 2011), 

https://www.regulations.gov/comment/FTC-2022- 

0036-0043 (‘‘Confusing or misleading sales terms[.] 

Extra fees was [sic] added at the time of purchase 

and to this day I still do not understand what the 

fee was for; it made the payment higher.’’); Carrie 

Ferraro, Legal Servs. of N.J., Comment Letter on 

Public Roundtables: Protecting Consumers in the 

Sale and Leasing of Motor Vehicles, Project No. 

P104811, Submission No. 558507–00061 (Dec. 29, 

2011), https://www.regulations.gov/comment/FTC2022-0036-0059 (citing ‘‘[d]ealers engage[d] in 

packing’’ as an example of the common consumer 

complaints of car-sales-related fraud received by 

LSNJ’s legal advice hotline); Rosemary Shahan, 

Consumers for Auto Reliability and Safety, 

Comment Letter on Public Roundtables: Protecting 

Consumers in the Sale and Leasing of Motor 

Vehicles, Project No. P104811, Submission No. 

558507–00069 at 3 (Jan. 31, 2012), https://

www.regulations.gov/comment/FTC-2022-0036- 

0069 (noting that ‘‘[m]any common auto scams do 

not generate complaints in proportion to how 

pervasive or costly the practices are, simply because 

the consumers generally remain unaware they have 

been scammed,’’ including as a result of ‘‘[l]oan 

packing’’); Mary W. Sullivan, Matthew T. Jones & 

Carole L. Reynolds, Fed. Trade Comm’n, ‘‘The Auto 

Buyer Study: Lessons from In-Depth Consumer 

Interviews and Related Research,’’ Supplemental 

Appendix: Redacted Interview Transcripts at 525 

(2020) [hereinafter Auto Buyer Study: Appendix], 

https://www.ftc.gov/system/files/documents/ 

reports/buckle-navigating-auto-sales-financing/ 

bcpstaffreportautobuyerstudysuppappendix.pdf 

(Study participant 169810: consumer had 

‘‘additional items’’ charges on contract that 

consumer could not identify); id. at 730, 740–42 

(Study participant 188329: dealer did not tell 

consumer about GAP or service contract but 

consumer was charged $599 and $1,950 for those 

add-ons, respectively); Press Release, N.Y. State 

Att’y Gen., ‘‘A.G. Schneiderman Announces Nearly 

$14 Million Settlement with NYC and Westchester 

Auto Dealerships for Deceptive Practices that 

Resulted in Inflated Car Prices’’ (June 17, 2015), 

https://ag.ny.gov/press-release/2015/agschneiderman-announces-nearly-14-millionsettlement-nyc-and-westchester-auto (‘‘This 

settlement is part of the [New York] attorney 

general’s wider initiative to end the practice of 

‘jamming,’ unlawfully charging consumers for 

hidden purchases by car dealerships.’’). 

67Under the Truth in Lending Act (‘‘TILA’’) and 

its implementing Regulation Z, required add-on 

products or services must be factored into the APR 

and the finance charge disclosed during the 

transaction. See 15 U.S.C. 1605, 1606, 1638; 12 CFR 

226.4, 226.18(b), (d), (e), and 226.22. It is legally 

impermissible for dealers to include charges for 

such products in a consumer’s contract without 

disclosing them. See, e.g., Complaint ¶¶ 57–60, Fed. 

Trade Comm’n v. Stewart Fin. Co. Holdings, Inc., 

No. 1:03–CV–2648 (N.D. Ga. Sept. 4, 2003) (alleging 

violations for failure to include the cost of required 

add-on products in the finance charge and annual 

percentage rate disclosed to consumers). 

68See, e.g., Buckle Up, supra note 63, at 6; Fed. 

Trade Comm’n, Military Consumer Financial 

Workshop, Panel 1, Tr. 19:25–41 (July 19, 2017), 

https://www.ftc.gov/news-events/events-calendar/ 

military-consumer-workshop; Fed. Trade Comm’n, 

‘‘The Road Ahead: Selling, Financing & Leasing 

Motor Vehicles,’’ Public Roundtable, Session 2, Tr. 

at 40–41 (Aug. 2 2011), https://www.ftc.gov/newsevents/events/2011/08/road-ahead-sellingfinancing-leasing-motor-vehicles (noting that 

optional products and services are often already 

included in the monthly payment prices advertised 

or quoted); Christopher Kukla, Ctr. for Responsible 

Lending, Comment Letter on Public Roundtables: 

Protecting Consumers in the Sale and Leasing of 

Motor Vehicles, Project No. P104811, Submission 

No. 558507–00071 at 10 (Feb. 1, 2012), https://

www.regulations.gov/comment/FTC-2022-0036- 

0068 (discussing how dealers conceal packing by 

expressing an increase in price in terms of monthly 

payment); Att’ys General of 31 States & DC, 

Comment Letter on Public Roundtables: Protecting 

Consumers in the Sale and Leasing of Motor 

Vehicles, Project No. P104811, Submission No. 

558507–00112 at 5 (Apr. 13, 2012), https://

www.regulations.gov/comment/FTC-2022-0036- 

0124 (discussing the ‘‘age-old auto salesperson’s 

trick’’ of quoting monthly payment prices without 

disclosing that the quote includes the cost of 

optional items that the customer has not yet agreed 

to purchase). 69See, e.g., Complaint ¶¶ 9, 26, Fed. Trade 

Comm’n v. Liberty Chevrolet, Inc., No. 1:20–cv– 

03945 (S.D.N.Y. May 21, 2020) (charging defendants 

with discriminating on the basis of race, color, and 

national origin by charging higher interest rates and 

inflated fees); Press Release, N.Y. State Att’y Gen., 

‘‘Attorney General James Delivers Restitution to 

New Yorkers Cheated by Auto Dealership’’ (Nov. 

17, 2020), https://ag.ny.gov/press-release/2020/ 

attorney-general-james-delivers-restitution-newyorkers-cheated-auto-dealership (dealership 

targeted Chinese speakers for unlawful payment 

packing or ‘‘jamming’’); Military Consumer 

Financial Workshop, Tr. 19:21 (July 19, 2017), 

https://www.ftc.gov/news-events/events/2017/07/ 

military-consumer-workshop (panelist discussing 

servicemembers experiencing payment packing); 

see also Fed. Trade Comm’n, ‘‘Staff Perspective: A 

Closer Look at the Military Consumer Financial 

Workshop’’ 2–3 (Feb. 2018), https://www.ftc.gov/ 

system/files/documents/reports/closer-lookmilitary-consumer-financial-workshop-federaltrade-commission-staff-perspective/military_

consumer_workshop_-_staff_perspective_2-2-18.pdf 

(explaining the unique situation of servicemembers 

whose steady paychecks make them attractive 

customers for dealers, while having no or minimal 

credit history, meaning they qualify for less 

advantageous credit terms and higher interest rate 

financing). 

70See, e.g., Buckle Up, supra note 63, at 6 

(observing that the introduction of ‘‘add-ons during 

financing discussions caused several participants’ 

total sale price to balloon from the cash price’’); id. 

at 9 (observing that, for most consumers in the 

study, ‘‘add-ons did not come up until the financing 

process, if at all, after a long car-buying process and 

at a time when the consumer often felt pressure to 

close the deal’’); id. (noting that most study 

participants’ contracts included add-ons charges, 

but that many ‘‘were unclear what those add-ons 

included, and sometimes did not realize they had 

purchased any add-ons at all’’); id. at 7 (explaining 

situations where the consumer reached the 

financing office after negotiating with the sales staff 

and were then told that the agreed upon price was 

not compatible with key financing terms—for 

example, a promised rebate or discount could not 

be combined with an advertised interest rate). 

71Complaint ¶¶ 12–19, Fed. Trade Comm’n v. 

Liberty Chevrolet, Inc., No. 1:20–cv–03945 (S.D.N.Y. 

May 21, 2020) (alleging deceptive and unauthorized 

add-on charges in consumers’ transactions); 

Complaint ¶¶ 59–64, Fed. Trade Comm’n v. 

Universal City Nissan, Inc., No. 2:16–cv–07329 

(C.D. Cal. Sept. 29, 2016) (alleging deceptive and 

unauthorized add-on charges in consumers’ 

transactions); Complaint ¶¶ 6, 9, TT of Longwood, 

No. C–4531 (F.T.C. July 2, 2015) (alleging 

misrepresentations regarding prices for added 

features); see also Auto Buyer Study, supra note 25, 

at 14. 

72Complaint ¶¶ 4–14, Nat’l Payment Network, 

Inc., No. C–4521 (F.T.C. May 4, 2015) (alleging 

failure to disclose fees associated with financing 

program; misleading savings claims in 

advertisements); Complaint ¶¶ 4–13, Matt Blatt Inc., 

No. C–4532 (F.T.C. July 2, 2015) (alleging failure to 

disclose fees associated with financing program; 

misleading savings claims); Buckle Up, supra note 

63, at 10 (noting that some Auto Buyer Study 

participants did not fully understand material 

aspects of extended warranties or service plans they 

purchased and ‘‘were surprised to discover during 

the interview that their plans had unexpected 

limitations’’ or that ‘‘they had to pay out-of-pocket 

for repairs or services that were not covered’’; for 

example, one ‘‘consumer purchased a ‘Lifetime’ 

maintenance plan, only to discover later that he 

received a one-year plan that covered periodic oil 

changes’’). Cf. Consent Order ¶¶ 10–16, Santander 

to purchase those add-ons without 

knowing about or agreeing to them, or 

without knowing or agreeing to their 

costs or other key terms.66

Unscrupulous dealers are able to slip 

the often considerable additional costs 

for these items past consumers 

unnoticed and into purchase contracts 

through a variety of means, including by 

not mentioning them at all,67 or by 

focusing consumers’ attention on other 

aspects of the complex transaction, such 

as monthly payments, which might 

increase only marginally with the 

addition of prorated add-on costs, or 

may even be made to decrease if the 

financing term is extended.68 This type 

of conduct can target immigrants, 

communities of color, and 

servicemembers.69 In other instances, 

dealers might wait until late in the 

transaction to mention add-ons, and 

then do so in a misleading manner. For 

example, participants in an FTC 

qualitative study on consumers’ carbuying experiences cited situations 

where dealers waited until the financing 

stage to mention add-ons, after 

consumers believed they had agreed on 

terms, and even though many add-ons 

have nothing to do with financing and 

were not mentioned at all during the 

sales process or when prices were 

initially negotiated.70 According to FTC 

enforcement actions, dealers also have 

represented that add-ons are required 

when in fact they are not,71 have 

misrepresented the purported benefits 

of add-ons, and have failed to disclose 

material limitations.72


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Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 597 

Consumer USA, Inc., CFPB No. 2018–BCFP–0008 

(Nov. 20, 2018) (finding that defendant sold GAP 

product allegedly providing ‘‘full coverage’’ to 

consumers with loan-to-value ratios (‘‘LTVs’’) above 

125%, when in fact coverage was limited to 125% 

of LTV). 

73Complaint ¶ 27, Fed. Trade Comm’n v. N. Am. 

Auto. Servs., Inc., No. 1:22–cv–01690 (N.D. Ill. Mar. 

31, 2022). 

74The study is described in the Commission’s 

reports: Auto Buyer Study, supra note 25, and 

Buckle Up, supra note 63. Some industry 

commenters critiqued the FTC’s reliance on this 

qualitative study. The Commission notes that the 

study provides helpful qualitative insight from 

consumer interviews regarding their recent motor 

vehicle purchases and is one of the many sources 

the Commission has considered, including 

consumer complaints, enforcement actions, 

outreach and dialogue with stakeholders and 

consumer groups, among others, as described in 

this SBP and in the NPRM. 

75Auto Buyer Study: Appendix, supra note 66, at 

130 (Study participant 152288); see also id. at 202– 

03 (Study participant 180267: dealership included 

a charge for GAP in the final paperwork but not in 

retail sales contract); id. at 296 (Study participant 

146748: consumer learned during interview with 

FTC that consumer purchased GAP: ‘‘maybe they’re 

just throwing that in there without telling you’’). 

76 Individual commenter, Doc. No. FTC–2022– 

0046–4648. 

77 Individual commenter, Doc. No. FTC–2022– 

0046–0016. 

78 Individual commenter, Doc. No. FTC–2022– 

0046–1216. 

79 Individual commenter, Doc. No. FTC–2022– 

0046–3615. 

80 Individual commenter, Doc. No. FTC–2022– 

0046–7366. 

81 Individual commenter, Doc. No. FTC–2022– 

0046–3693. 

82 Individual commenter, Doc. No. FTC–2022– 

0046–3678. 

83 Individual commenter, Doc. No. FTC–2022– 

0046–1479. 

84 Individual commenter, Doc. No. FTC–2022– 

0046–1878. 

Indeed, as previously noted, in a 

recent FTC enforcement action, the 

Commission cited a survey finding that 

83% of consumers from the named 

dealers were charged for add-on 

products or services that they did not 

authorize or as a result of deceptive 

claims.73

One participant in an FTC qualitative 

study of consumers’ car-buying 

experiences summed up these issues 

during an interview after having 

purchased a vehicle.74 The consumer 

purchased a $2,000 service contract that 

the dealer falsely said was free, and a 

$900 GAP agreement that the dealer 

falsely said was mandatory. The 

consumer only learned about these 

purchases during the study interview. 

This consumer remarked: 

I feel I’ve been taken advantage of, to be 

honest with you. Even though I thought that 

I was getting a great deal with the interest 

rate, but I know [sic] see that they’re also 

very sneaky about putting stuff on your 

paperwork. They only let you skim through 

the paperwork that you have to sign and they 

just kind of tell you what it is. This is this, 

this is that, this is this, and then you just sign 

it away. You’re so tired, you’re so worn 

down, you don’t want to be there no more. 

You just want to get it done and over with. 

They take advantage of that. Yes, they still 

play this friendly card, you know, thank you 

for your business card kind of thing. Like I 

said, they never lose. They never lose.75

Similarly, in response to the 

Commission’s notice of proposed 

rulemaking, thousands of commenters 

described issues they faced when 

purchasing, financing, or leasing a 

vehicle. Many comments the 

Commission received in support of the 

NPRM were from self-identified military 

consumers and dealership employees. 

Examples of supportive comments 

include the following: 

• As a young Marine stationed in a 

military town I was taken advantage of 

by a dealership when purchasing my 

first car. It set me back financially for 

years. I know of many young military 

people who purchased vehicle[]s and 

we[]re instantly so far upside down after 

leaving the dealership with thousands 

of dollars in add on junk charges . . . . 

Please make it more difficult for 

dishonest dealers like these to 

financially burden young Americans 

and Americans of any age for that 

matter.76

• Imagine going to a restaurant 

franchise and order[ing] a burger and 

fries for $10 and the franchise 

employees say[,] ‘Sorry that will be $25 

dollars, there is a $10 restaurant 

adjustment price due to market 

conditions and $5 for us to place and 

document your order.’ You would walk 

away without hesitation because that 

would [be] absolutely ridiculous. Yet, 

dealerships are allowed to do exactly 

that. . . . IT IS TIME TO CHANGE 

AND PROTECT CONSUMERS[.]77

• As in many other areas, it is the 

vulnerable in our society who are 

probably most affected by such 

deceptive practices. . . . Sadly, it is 

often these very people who desperately 

need a dependable, affordable car for 

transportation to work, school, 

shopping, or medical care. To entice, 

pressure, or trick people into buying a 

car that is more than they can afford sets 

them up for financial failure, not only 

in possibly having a needed car 

repossessed, but in long-term damage to 

their credit. . . . In closing, I would be 

extremely happy to see rules such as 

those described above enacted, and 

don’t think these could come a day too 

soon. It’s a step in the right direction for 

the protection of the consumer.78

• None of us working here at the 

dealership in sales benefit from [unfair 

and deceptive practices]. We cringe as 

much as every customer and have to 

show up to work every[ ]day and hope 

we are not forced to screw someone 

with these BS products. . . . I would 

hope when [t]he regulators are making 

their decisions, they understand the 

positive implications this would have 

for dealership employees both 

financially and mentally.79

• Generally, I’m not a person in favor 

of government regulation. However, as a 

potential customer and cash buyer, I feel 

there is certainly a need to bring car 

dealers back into check. I’m just looking 

for a more honest and transparent 

process. I don’t want to be taken 

advantage of. I certainly don’t want my 

family members or [s]oldiers to be taken 

advantage of. Therefore, I feel it is in the 

best interest of future customers to 

support this regulation.80

• I cannot stress enough my support 

for these new rules. Currently, 

dealerships across the US, including the 

one I work for, have made the car 

buying process needlessly confusing, 

expensive, and frustrating by engaging 

in false advertising and hidden add-on 

products.81

• I can tell you after many years of car 

buying I have NEVER walked out of a 

dealership feeling good. Even worse, 

I’ve never purchased a car feeling like 

I fully understood what I was 

getting. . . . Looking forward to seeing 

the change happen SOON! 82

• When I buy a gallon of milk from 

the store, the price is written next to the 

milk. When I go pay, I pay the price 

advertised next to the milk. Would it be 

OK if I go up to pay and that gallon of 

milk had anywhere between 1% and 

1,200% markup depending on the day, 

what you look like, what you drove to 

the store in, if you’re a man or a 

woman? 83

• We ended up having to drive 3 

hours to the [vehicle we] wanted. Upon 

arriving to pick[ ]up the car we were 

told there was a [$]4,300 increase over 

MSRP. We were told if we didn’t take 

it they had someone else waiting to 

purchase it. We needed the car and 

didn’t have time to hunt down another 

one so ended up purchasing it. Very 

disappointed in the long and awful 

process.84

• The worst is dealing with car 

dealers. You never know what the real 

price is on a vehicle until you spend a 

few hours with them. Mandatory 

add[-] on[ ]s, market availability 

surcharges, doc fees that vary from 

dealer to dealer. . . . Then dealing with 

the finance manager who tr[ie]s to sell 

you everything you don’t[ ]need. They 

high pressure the consumer on 

purchasing extend[ed] warranties. There 


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598 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

85 Individual commenter, Doc. No. FTC–2022– 

0046–0825. 

86 Individual commenter, Doc. No. FTC–2022– 

0046–4833. 

87 Individual commenter, Doc. No. FTC–2022– 

0046–1690. 

88Complaint, Fed. Trade Comm’n v. Rhinelander 

Auto Ctr., Inc., No. 3:23–cv–00737 (W.D. Wis. Oct. 

24, 2023); Complaint, Fed. Trade Comm’n v. 

Passport Auto. Grp., Inc., No. 8:22–cv–02670–GLS 

(D. Md. Oct. 18, 2022); Complaint, Fed. Trade 

Comm’n v. N. Am. Auto. Servs., Inc., No. 1:22–cv– 

01690 (N.D. Ill. Mar. 31, 2022); Complaint, Traffic 

Jam Events, LLC, No. 9395 (F.T.C. Aug. 7, 2020); 

Complaint, Fed. Trade Comm’n v. Liberty 

Chevrolet, Inc., No. 1:20–cv–03945 (S.D.N.Y. May 

21, 2020); Complaint, Federal-Mogul Motorparts 

LLC, No. C–4717 (F.T.C. May 12, 2020); Complaint, 

LightYear Dealer Techs., LLC, No. C–4687 (F.T.C. 

Sept. 3, 2019); Complaint, Fed. Trade Comm’n v. 

Passport Imports, Inc., No. 8:18–cv–03118 (D. Md. 

Oct. 10, 2018); Complaint, Fed. Trade Comm’n v. 

Tate’s Auto Ctr. of Winslow, Inc., No. 3:18–cv– 

08176–DJH (D. Ariz. July 31, 2018); Complaint, 

Cowboy AG, LLC, No. C–4639 (F.T.C. Jan. 4, 2018); 

Complaint, Fed. Trade Comm’n v. Norm Reeves, 

Inc., No. 8:17–cv–01942 (C.D. Cal. Nov. 3, 2017); 

Complaint, Asbury Auto. Grp., Inc., No. C–4606 

(F.T.C. Mar. 22, 2017); Complaint, CarMax, Inc., No. 

C–4605 (F.T.C. Mar. 22, 2017); Complaint, WestHerr Auto. Grp., Inc., No. C–4607 (F.T.C. Mar. 22, 

2017); Complaint, Fed. Trade Comm’n v. 

Volkswagen Grp. of Am., Inc., No. 3:16–cv–01534 

(N.D. Cal. Jan. 31, 2017); Complaint, Fed. Trade 

Comm’n v. Uber Techs., Inc., No. 3:17–cv–00261 

(N.D. Cal. Jan. 19, 2017); Complaint, Gen. Motors 

LLC, No. C–4596 (F.T.C. Dec. 8, 2016); Complaint, 

Jim Koons Mgmt. Co., No. C–4598 (F.T.C. Dec. 8, 

2016); Complaint, Lithia Motors, Inc., No. C–4597 

(F.T.C. Dec. 8, 2016); Complaint, Fed. Trade 

Comm’n v. Universal City Nissan, Inc., No. 2:16– 

cv–07329 (C.D. Cal. Sep. 29, 2016); Complaint, 

United States v. New World Auto Imports, Inc., No. 

3:16–cv–02401–K (N.D. Tex. Aug. 18, 2016); 

Complaint, Progressive Chevrolet Co., No. C–4578 

(F.T.C. June 13, 2016); Complaint, BMW of N. Am., 

LLC, No. C–4555 (F.T.C. Oct. 21, 2015); Complaint, 

United States v. Tricolor Auto Acceptance, LLC, No. 

3:15–cv–3002 (N.D. Tex. Sept. 15, 2015); 

Complaint, JS Autoworld, Inc., No. C–4535 (F.T.C. 

Aug. 13, 2015); Complaint, TC Dealership, L.P., No. 

C–4536 (F.T.C. Aug. 13, 2015); Complaint, Matt 

Blatt Inc., No. C–4532 (F.T.C. July 2, 2015); 

Complaint, TT of Longwood, Inc., No. C–4531 

(F.T.C. July 2, 2015); Complaint, Fin. Select, Inc., 

No. C–4528 (F.T.C. June 2, 2015); Complaint, First 

Am. Title Lending of Ga., LLC, No. C–4529 (F.T.C. 

June 2, 2015); Complaint, City Nissan Inc., No. C– 

4524 (F.T.C. May 4, 2015); Complaint, Jim Burke 

Auto., Inc., No. C–4523 (F.T.C. May 4, 2015); 

Complaint, Nat’l Payment Network, Inc., No. C– 

4521 (F.T.C. May 4, 2015); Complaint, TXVT Ltd. 

P’ship, No. C–4508 (F.T.C. Feb. 12, 2015); 

Complaint, Fed. Trade Comm’n v. Regency Fin. 

Servs., LLC, No. 1:15–cv–20270–DPG (S.D. Fla. Jan. 

26, 2015); Complaint, United States v. Billion Auto, 

Inc., No. 5:14–cv–04118–MWB (N.D. Iowa Dec. 11, 

2014); Complaint, Fed. Trade Comm’n v. Ramey 

Motors, Inc., No. 1:14–cv–29603 (S.D. W. Va. Dec. 

11, 2014); Complaint, Fed. Trade Comm’n v. 

Consumer Portfolio Servs., Inc., No. 14–cv–00819 

(C.D. Cal. May 28, 2014); Complaint, Nissan N. Am., 

Inc., No. C–4454 (F.T.C. May 1, 2014); Complaint, 

TBWA Worldwide, Inc., No. C–4455 (F.T.C. May 1, 

2014); Complaint, Bill Robertson & Sons, Inc., No. 

C–4451 (F.T.C. Apr. 11, 2014); Complaint, 

Paramount Kia of Hickory, LLC, No. C–4450 (F.T.C. 

Apr. 11, 2014); Complaint, Fed. Trade Comm’n v. 

Abernathy Motor Co., No. 3:14–cv–00063–BRW 

(E.D. Ark. Mar. 12, 2014); Complaint, Fowlerville 

Ford, Inc., No. C–4433 (F.T.C. Feb. 20, 2014); 

Complaint, Infiniti of Clarendon Hills, Inc., No. C– 

4438 (F.T.C. Feb. 20, 2014); Complaint, Luis 

Alfonso Sierra, No. C–4434 (F.T.C. Feb. 20, 2014); 

Complaint, Mohammad Sabha, No. C–4435 (F.T.C. 

Feb. 20, 2014); Complaint, Norm Reeves, Inc., No. 

C–4436 (F.T.C. Feb. 20, 2014); Complaint, Ganley 

Ford West, Inc., No. C–4428 (F.T.C. Jan. 28, 2014); 

Complaint, Timonium Chrysler, Inc., No. C–4429 

(F.T.C. Jan. 28, 2014); Complaint, Courtesy Auto 

Grp., Inc., No. 9359 (F.T.C. Jan. 7, 2014); Complaint, 

Franklin’s Budget Car Sales, Inc., No. C–4371 

(F.T.C. Oct. 3, 2012); Complaint, Fed. Trade 

Comm’n v. Matthew J. Loewen, No. 2:12–cv–01207– 

MJP (W.D. Wash. July 13, 2012); Complaint, Key 

Hyundai of Manchester, LLC, No. C–4358 (F.T.C. 

May 4, 2012); Complaint, Billion Auto, Inc., No. C– 

4356 (F.T.C. May 1, 2012); Complaint, Frank Myers 

AutoMaxx, LLC, No. C–4353 (F.T.C. Apr. 19, 2012); 

Complaint, Ramey Motors, Inc., No. C–4354 (F.T.C. 

Apr. 19, 2012); Complaint, Fed. Trade Comm’n v. 

Hope for Car Owners, LLC, No. 2:12–cv–00778– 

GEB–EFB (E.D. Cal. Mar. 27, 2012); Complaint, Fed. 

Trade Comm’n v. NAFSO VLM, Inc., No. 2:12–cv– 

00781–KJM–EFB (E.D. Cal. Mar. 27, 2012); 

Complaint, Fed. Trade Comm’n v. Stewart Fin. Co. 

Holdings, Inc., No. 1:03–CV–2648 (N.D. Ga. Sept. 4, 

2003); Complaint, Pacifico Ardmore, Inc., No. C– 

3920 (F.T.C. Feb. 7, 2000). 

89Operation Steer Clear and Operation Ruse 

Control, brought with State law enforcement 

partners around the nation and Canada, 

encompassed 252 enforcement actions. See Press 

Release, Fed. Trade Comm’n, ‘‘Multiple Law 

Enforcement Partners Announce Crackdown on 

Deception, Fraud in Auto Sales, Financing and 

Leasing’’ (Mar. 26, 2015), https://www.ftc.gov/newsevents/press-releases/2015/03/ftc-multiple-lawenforcement-partners-announce-crackdown. 

90For example, the FTC has held public 

workshops: (1) in conjunction with the National 

Highway Traffic Safety Administration to examine 

the consumer privacy and security issues posed by 

automated and connected motor vehicles, see Fed. 

Trade Comm’n, ‘‘Connected Cars: Privacy, Security 

Issues Related to Connected, Automated Vehicles’’ 

(June 28, 2017), https://www.ftc.gov/news-events/ 

events-calendar/2017/06/connected-cars-privacysecurity-issues-related-connected; (2) to explore 

competition and related issues in the U.S. motor 

vehicle distribution system including how 

consumers and businesses may be affected by State 

regulations and emerging trends in the industry, see 

Fed. Trade Comm’n, ‘‘Auto Distribution: Current 

Issues & Future Trends’’ (Jan. 19, 2016), https://

www.ftc.gov/news-events/events-calendar/2016/01/ 

auto-distribution-current-issues-future-trends; (3) 

on military consumer financial issues, including 

automobile purchases, financing, and leasing, see 

Fed. Trade Comm’n, ‘‘Military Consumer 

Workshop’’ (July 19, 2017), https://www.ftc.gov/ 

news-events/events-calendar/military-consumerworkshop; and (4) through a series of three 

roundtables on numerous issues in selling, 

financing, and leasing automobiles, see Fed. Trade 

Comm’n, ‘‘The Road Ahead: Selling, Financing & 

Leasing Motor Vehicles’’ (Apr. 12, 2011), https://

www.ftc.gov/news-events/events-calendar/2011/04/ 

road-ahead-selling-financing-leasing-motorvehicles; Fed. Trade Comm’n, ‘‘The Road Ahead: 

Selling, Financing & Leasing Motor Vehicles’’ (Aug. 

2, 2011), https://www.ftc.gov/news-events/eventscalendar/2011/08/road-ahead-selling-financingleasing-motor-vehicles; Fed. Trade Comm’n, ‘‘The 

Road Ahead: Selling, Financing & Leasing Motor 

Vehicles’’ (Nov. 17, 2011), https://www.ftc.gov/ 

news-events/events-calendar/2011/11/road-aheadselling-financing-leasing-motor-vehicles; see also 

Consumers for Auto Reliability and Safety, 

Comment Letter on Motor Vehicle Roundtables, 

Project No. P104811, at 6 (Apr. 1, 2012), https://

www.ftc.gov/sites/default/files/documents/public_

comments/public-roundtables-protectingconsumers-sale-and-leasing-motor-vehicles-projectno.p104811-00108/00108-82875.pdf (stating that 

the Director of the Navy-Marine Corps Relief 

Society in San Diego indicated before the California 

Assembly Committee on Banking and Finance that 

‘‘the number one issue they are confronted with is 

used car dealers who are taking advantage of 

military personnel’’). These events, and others, have 

included speakers representing consumers, dealers, 

regulators, and other industry stakeholders. 

needs [to be] some sort of policing [of] 

these unscrupulous car dealers to 

protect the buyers.85

• This is a good start to making car 

purchasing a better experience. . . . I 

remember looking at a Lexus and being 

told by the dealership, the only one in 

the state, that [S]cotchguard and 

undercoating were mandatory and they 

refused to sell any vehicles without 

them. There were two Acura dealerships 

in town and one of them included ‘free’ 

lifetime oil changes that I didn’t learn 

about until negotiating the price and 

had already spent two hours in 

negotiations. All of these services/price 

adjustments were not disclosed at the 

start of the negotiation and were only 

revealed either in the manager’s office 

or when the purchase agreement was 

presented to me by the salesperson. 

After spending time on the test drive 

and negotiating the price, it felt that 

these last minute price adjustments 

were being revealed that late in the 

process so that I wouldn’t leave.86

• Please enact and enforce these 

regulations to protect vulnerable 

consumers from predatory business 

practices enjoyed by dealers. Our family 

experienced such practices when trying 

to purchase a vehicle in early 2022. It 

was only after five hours at the 

dealership that we discovered the dealer 

had added on a $3,000 market 

adjustment and $3,100 in other add-ons 

(nitrogen-filled tires, LoJack, paint 

protection) to MSRP. This raised the 

price by about $6,000 and caused us to 

use extra PTO over that week to find a 

new vehicle at a price within our 

budget. Greater transparency in the carbuying process is desperately needed to 

protect vulnerable consumers—who 

usually lack any bargaining power— 

against power dealer networks and their 

special interest groups....87

C. Law Enforcement and Other 

Responses 

The Commission has taken action to 

protect consumers from deceptive and 

unfair acts or practices in the motor 

vehicle marketplace. As noted in the 

NPRM, the Commission has brought 

more than 50 auto law enforcement 

actions; 88 led two law enforcement 

sweeps, including one that involved 181 

State enforcement actions; 89 published 

two reports on a qualitative study of 

consumer experiences while purchasing 

motor vehicles; and held workshops 

with various stakeholders to discuss the 

motor vehicle marketplace.90


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Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 599 

91The CFPB has brought at least 23 enforcement 

actions involving motor vehicles, financing, or addon products or services. See Consent Order ¶¶ 3, 

13–57, Toyota Motor Credit Corp., CFPB No. 2023– 

CFPB–0015 (Nov. 20, 2023) (finding auto lender 

engaged in unfair or abusive acts or practices by 

making it unreasonably difficult for consumers to 

cancel unwanted add-ons; failing to ensure 

consumers received refunds of payments they had 

made for certain add-ons that had become void and 

worthless; and failing to provide refunds owed to 

consumers who canceled their vehicle service 

agreements); 

Complaint ¶¶ 75–104, CFPB v. USASF Servicing, 

LLC, No. 1:23–cv–03433–VMC (N.D. Ga. Aug. 2, 

2023) (alleging auto loan servicer illegally disabled 

and repossessed consumers’ vehicles, wrongfully 

double-billed consumers, misapplied payments, 

and failed to ensure refunds of unearned GAP 

premiums to which consumers were entitled); 

Consent Order ¶¶ 7–33, TMX Finance LLC, CFPB 

No. 2023–CFPB–0001 (Feb. 23, 2023) (finding auto 

lender understated and inaccurately disclosed the 

finance charge and annual percentage rate on loans 

and unfairly charged borrowers for a product that 

provided no benefit); Complaint ¶¶ 33–135, 171–

226, CFPB v. Credit Acceptance Corp., No. 1:23–cv– 

00038 (S.D.N.Y. Jan. 4, 2023) (alleging indirect auto 

lender misrepresented key terms of loans provided 

to subprime and deep-subprime consumers and 

substantially assisted dealers in the deceptive sale 

of add-on products); Consent Order ¶¶ 7–22, Wells 

Fargo Bank, N.A., CFPB No. 2022–CFPB–0011 (Dec. 

20, 2022) (finding bank incorrectly applied 

borrowers’ auto loan payments, erroneously 

assessed fees and interest, wrongly repossessed 

borrowers’ vehicles, and failed to ensure borrowers 

received refunds of unearned GAP fees at early 

payoff); Consent Order ¶¶ 4–55, Hyundai Capital 

America, CFPB No. 2022–CFPB–0005 (July 26, 

2022) (finding auto finance company furnished 

inaccurate information about consumers to credit 

reporting agencies); Consent Order ¶¶ 4–14, 3rd 

Generation, Inc., CFPB No. 2021–CFPB–0003 (May 

21, 2021) (finding subprime auto loan servicer 

charged interest on late payments of fees without 

the knowledge or consent of consumers); Consent 

Order ¶¶ 8–50, Santander Consumer USA Inc., 

CFPB No. 2020–BCFP–0027 (Dec. 22, 2020) (finding 

auto finance company provided inaccurate records 

to credit reporting agencies); Consent Order ¶¶ 11

–52, Nissan Motor Acceptance Corp., CFPB No. 

2020–BCFP–0017 (Oct. 13, 2020) (finding auto 

finance company misrepresented financing 

extension agreements, repossessions, and 

limitations to consumer bankruptcy protections); 

Consent Order ¶¶ 8–22, Lobel Fin. Corp., CFPB No. 

2020–BCFP–0016 (Sept. 21, 2020) (finding autoloan servicer unfairly charged delinquent 

consumers add-on charges in the form of Loss 

Damage Waiver premiums); Consent Order ¶¶ 6–30, 

Santander Consumer USA Inc., CFPB No. 2018– 

BCFP–0008 (Nov. 20, 2018) (finding auto finance 

company sold GAP to consumers with LTV over 

125%, misrepresenting that such consumers would 

be fully covered with total loss); 

Consent Order ¶¶ 27–39, Wells Fargo Bank, N.A., 

CFPB No. 2018–BCFP–0001 (Apr. 20, 2018) (finding 

bank imposed duplicative or unnecessary forcedplaced auto loan insurance on consumers); Consent 

Order ¶¶ 12–23, Toyota Motor Credit Corp., CFPB 

No. 2016–CFPB–0002 (Feb. 2, 2016) (finding auto 

finance company engaged in discriminatory pricing 

markup for motor vehicle financing, without regard 

to creditworthiness); Consent Order ¶¶ 73–75, Y 

King S Corp., CFPB No. 2016–CFPB–0001 (Jan. 21, 

2016) (finding used car dealer failed to disclose 

mandatory add-ons as financing charges); Consent 

Order ¶¶ 12–51, Interstate Auto Grp., Inc., CFPB 

No. 2015–CFPB–0032 (Dec. 17, 2015) (finding 

dealership and financing company reported 

information they knew or had reasonable cause to 

believe was inaccurate to credit reporting entities, 

harming consumer credit); Consent Order ¶¶ 7–90, 

Westlake Servs., LLC, CFPB No. 2015–CFPB–0026 

(Sept. 30, 2015) (finding indirect auto financing 

entity used illegal debt collection tactics); Consent 

Order ¶¶ 8–23, Fifth Third Bank, CFPB No. 2015– 

CFPB–0024 (Sept. 28, 2015) (finding discrimination 

against loan applicants in credit applications based 

on characteristics such as race and national origin); 

Consent Order ¶¶ 9–24, Am. Honda Fin. Corp., 

CFPB No. 2015–CFPB–0014 (July 14, 2015) (same); 

Consent Order ¶¶ 4–60, DriveTime Auto. Grp., 

Inc., CFPB No. 2014–CFPB–0017 (Nov. 19, 2014) 

(finding buy-here-pay-here dealership made 

harassing debt collection calls and provided 

inaccurate credit information to credit reporting 

agencies); Consent Order ¶¶ 4–37, First Investors 

Fin. Servs. Grp., Inc., CFPB No. 2014–CFPB–0012 

(Aug. 20, 2014) (finding auto financing company 

provided inaccurate records to credit reporting 

agencies); Consent Order ¶¶ 7–27, Ally Fin. Inc., 

CFPB No. 2013–CFPB–0010 (Dec. 20, 2013) (finding 

auto lender engaged in discriminatory pricing); 

Consent Order ¶¶ 14–29, U.S. Bank Nat’l Ass’n, 

CFPB No. 2013–CFPB–0004 (June 26, 2013) (finding 

bank failed to properly disclose all the fees charged 

to participants in the companies’ Military 

Installment Loans and Educational Services auto 

loans program, and misrepresented the true cost 

and coverage of add-on products financed along 

with the auto loans); Consent Order ¶¶ 10–22, 

Dealers’ Fin. Servs., LLC, CFPB No. 2013–CFPB– 

0004 (June 26, 2013) (finding financing company 

made deceptive statements regarding the cost of 

add-on products and the scope of coverage of the 

vehicle service contract). 92Operation Steer Clear and Operation Ruse 

Control, brought with State law enforcement 

partners around the nation and Canada, 

encompassed 252 enforcement actions. See Press 

Release, Fed. Trade Comm’n, ‘‘Multiple Law 

Enforcement Partners Announce Crackdown on 

Deception, Fraud in Auto Sales, Financing and 

Leasing’’ (Mar. 26, 2015), https://www.ftc.gov/newsevents/press-releases/2015/03/ftc-multiple-lawenforcement-partners-announce-crackdown. 

Separately, the California Attorney General’s office 

sued a dealership chain under State consumer 

protection laws for deceiving consumers about addon product charges and misrepresenting consumers’ 

income on credit applications; the alleged practices 

specifically targeted low-income consumers with 

subprime credit. Complaint ¶¶ 37–86, People v. 

Paul Blanco’s Good Car Co. Auto Grp., No. RG– 

19036081 (Cal. Super. Ct. Sept. 23, 2019). 

93See, e.g., Cal. Veh. Code 11713.1(b), (c); Or. 

Admin. R. 137–020–0020(3)(c); Wis. Admin. Code 

Trans. 139.03(3); Ind. Code 24–4.5–3–202. 

94Or. Admin. R. 137–020–0020(3)(c); Official 

Commentary, Or. Admin. R. 137–020–0020(3)(c). 

95Cal. Veh. Code 11713.1(b), (c); Wis. Admin. 

Code Trans. 139.03(3). 

96 Ind. Code 24–4.5–3–202(3)(e)(ix) (prohibiting 

the sale of any GAP coverage when the LTV is less 

than 80%); Cal. Civ. Code 2982.12(a)(5)(B) 

(prohibiting the sale of any GAP waiver in three 

scenarios, including when the amount financed for 

the vehicle exceeds the amount covered by the GAP 

waiver). 

97See Fed. Trade Comm’n, Business Guidance, 

‘‘Automobiles,’’ https://www.ftc.gov/businessguidance/industry/automobiles (last visited Dec. 5, 

2023). 

98See Fed. Trade Comm’n, ‘‘Buying and Owning 

a Car,’’ https://consumer.ftc.gov/shopping-anddonating/buying-and-owning-car (last visited Dec. 

5, 2023). 

99See, e.g., Ill. Sec’y of State Police, Dealer 

Handbook (Apr. 2022), https://www.ilsos.gov/ 

publications/pdf_publications/sos_dop66.pdf; Wis. 

DOT—Div. of Motor Vehicles, Motor Vehicle 

Salesperson Manual—2020, https://wisconsin

dot.gov/Documents/dmv/shared/salesmanual20.pdf; Enf’t Div. of the Tex. Dep’t of Motor 

Vehicles, Motor Vehicle Dealer Manual (2017), 

https://www.txdmv.gov/sites/default/files/bodyfiles/Motor_Vehicle_Dealer_Manual.pdf. 

As discussed in the NPRM, the 

Commission’s law enforcement partners 

have also brought actions addressing 

unfair, abusive, and deceptive practices 

in the motor vehicle industry. For 

example, the Consumer Financial 

Protection Bureau (‘‘CFPB’’) has taken 

action against third-party motor vehicle 

financing entities in matters that raise 

similar, and sometimes identical, claims 

of deceptive and unfair acts or practices 

as have been at issue in FTC 

enforcement actions.91

In addition, States have engaged in 

enforcement actions alleging similar 

dealer misconduct in the motor vehicle 

dealer marketplace, and have 

implemented legislative and regulatory 

measures to address corresponding 

consumer protection issues. With regard 

to law enforcement, State regulators and 

Attorneys General have participated in 

law enforcement sweeps with the FTC, 

and have filed hundreds of actions 

alleging unlawful conduct by motor 

vehicle dealerships across the 

country.92 Furthermore, with regard to 

legislative and regulatory efforts, at least 

four States have enacted consumer 

protection measures relating to pricing 

or add-ons by motor vehicle dealers.93

For example, to ‘‘ensure that dealers do 

not add in hidden or undisclosed costs 

after the price for a vehicle has been 

advertised,’’ Oregon promulgated a rule 

that requires dealerships to state an 

‘‘offering price’’ that is the actual offer 

and amount the consumer can pay to 

own the vehicle, excluding only taxes 

and other specific items.94 California 

and Wisconsin have similarly enacted 

laws that make it unlawful for 

dealerships to advertise a total price 

without including additional costs to 

the purchaser outside the mandatory 

tax, title, and registration fees.95 Other 

States, such as Indiana, have enacted 

codes that prohibit the sale of add-ons 

in certain circumstances.96

The Commission and its law 

enforcement partners also regularly 

provide business guidance and 

consumer education regarding the motor 

vehicle marketplace. The Commission 

has compiled its motor vehicle business 

guidance into a portal on its website, 

with links to guidance documents, 

frequently asked questions, and legal 

resources.97 Likewise, the Commission 

provides a web page for consumers to 

learn more about buying, financing, and 

leasing motor vehicles.98 Several States 

have published similar such guidance 

manuals for motor vehicle dealers,99


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600 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

100See, e.g., Cal. Dept. of Just., ‘‘Buying and 

Maintaining a Car,’’ https://oag.ca.gov/consumers/

general/cars (last visited Dec. 5, 2023); Fla. 

Highway Safety & Motor Vehicles, ‘‘Buying from a 

Licensed Dealer,’’ https://www.flhsmv.gov/safetycenter/consumer-education/buying-vehicle-florida/ 

buying-licensed-dealer (last visited Dec. 5, 2023); 

Or. Dep’t of Just., ‘‘Buying a Vehicle,’’ https://

www.doj.state.or.us/consumer-protection/motorvehicles/buying-a-vehicle/ (last visited Dec. 5, 

2023). 

101Complaint ¶ 17, Fed. Trade Comm’n v. 

Passport Auto. Grp., Inc., No. 8:22–cv–2670 (D. Md. 

Oct. 18, 2022). 

102 Id. ¶ 18. Recent actions outside the auto 

marketplace, even in transactions that may not be 

as complex and time consuming as motor vehicle 

transactions, further illustrate unfair and deceptive 

practices related to advertising, add-ons, and 

hidden charges. In one such action, the court noted 

‘‘the realities of the disparate bargaining power’’ 

between the corporate defendant and its customers, 

adding that customers ‘‘might have believed the 

[add-on] fees were mandatory,’’ and ‘‘might not 

have had the time’’ to negotiate or complain about 

them. Fed. Trade Comm’n v. FleetCor Techs., Inc., 

1:19–cv–5727, 2022 WL 3350066, at *13 (N.D. Ga. 

Aug. 9, 2022) (granting the Commission’s motion to 

exclude the defendant’s expert testimony); see also 

Fed. Trade Comm’n v. FleetCor Techs., Inc., 620 F. 

Supp. 3d 1268, 1337 (N.D. Ga. 2022) (finding on 

summary judgment that (1) defendants did not tell 

consumers about fees at sign-up; (2) disclosures 

about fees in contractual documents were 

inadequate; and (3) defendants failed to get consent 

to add-on charges); id. at 1334 (concluding that 

defendants had ‘‘charged a slew of fees that: were 

never discoverable to customers [and] were 

obscured by undecipherable language’’); Complaint 

¶¶ 41–43, Fed. Trade Comm’n v. Harris Originals of 

NY, Inc., No. 2:22–cv–4260 (E.D.N.Y. July 20, 2022) 

(alleging that a jewelry company charged military 

consumers for add-on products without their 

consent or under false pretenses); Complaint ¶¶ 61– 

73, Fed. Trade Comm’n v. Benefytt Techs., Inc., No. 

8:22–cv–1794 (M.D. Fla. Aug. 8, 2022) (alleging 

illegal add-on charges by healthcare companies); 

Complaint ¶¶ 1–4, Fed. Trade Comm’n v. First Am. 

Payment Sys., LP, No. 4:22–cv–654 (E.D. Tex. July 

29, 2022) (alleging that a payment processing 

company misrepresented the terms and costs of its 

services, resulting in unexpected and unauthorized 

fees); Fed. Trade Comm’n, Notice of Proposed 

Rulemaking, Trade Regulation Rule on Unfair or 

Deceptive Fees, 88 FR 77420, 77435–37 (released 

Oct. 11, 2023; published Nov. 9, 2023), https://

www.govinfo.gov/content/pkg/FR-2023-11-09/pdf/ 

2023-24234.pdf. 

103Complaint ¶¶ 3–5, 11–18, 33–43, 48–51, Fed. 

Trade Comm’n v. Rhinelander Auto Ctr., Inc., No. 

3:23–cv–00737 (W.D. Wis. Oct. 24, 2023). 

104Complaint ¶¶ 128–30, CFPB v. Credit 

Acceptance Corp., No. 1:23–cv–38 (S.D.N.Y. Jan. 4, 

2023). 

105Complaint ¶ 3, Massachusetts v. Jaffarian’s 

Serv., Inc., No. 2277–cv–881 (Mass. Super. Ct. Sept. 

15, 2022); Assurance of Discontinuance ¶¶ 7–9, In 

re Hometown Auto Framingham, Inc., No. 2384–cv

–116 (Mass. Super. Ct. Jan. 17, 2023). 

106Complaint ¶ 5, Massachusetts v. Jaffarian’s 

Serv., Inc., No. 2277–cv–881 (Mass. Super. Ct. Jan. 

17, 2023). 

107Consumer Fin. Prot. Bureau, ‘‘Supervisory 

Highlights: Issue 24, Summer 2021’’ 3–4 (June 

2021), https://files.consumerfinance.gov/f/ 

documents/cfpb_supervisory-highlights_issue-24_

2021-06.pdf (finding servicers added and 

maintained unnecessary collateral protection 

insurance (CPI) when consumers had adequate 

insurance and thus the CPI provided no benefit to 

the consumers, and also when consumers’ vehicles 

had been repossessed even though no actual 

insurance protection was provided after 

repossession). 

108Consumer Fin. Prot. Bureau, ‘‘Supervisory 

Highlights: Issue 28, Fall 2022’’ 4–5 (Nov. 2022), 

https://files.consumerfinance.gov/f/documents/ 

cfpb_supervisory-highlights_issue-28_2022-11.pdf 

(finding consumers paid off their vehicle financing 

early but servicers failed to ensure consumers 

received refunds for unearned fees related to addon products which no longer offered any possible 

benefit to consumers after payoff). 

109Cal. Civ. Code 2982.12. 

110Press Release, Off. of the Att’y Gen. of Cal., 

‘‘Attorney General Bonta and Assemblymember 

Maienschein Announce Legislation to Strengthen 

Protections for Car Buyers’’ (Feb. 16, 2022), https:// 

oag.ca.gov/news/press-releases/attorney-generalbonta-and-assemblymember-maienscheinannounce-legislation. 

111Cal. Civ. Code 2982.12. 

112 Id. 

while others have provided online 

consumer education resources.100

While some commenters stated that 

existing Federal and State efforts are 

sufficient, recent Commission and 

partner actions indicate that misconduct 

has persisted despite prior law 

enforcement and other efforts, and 

despite the NPRM’s detailed description 

of chronic problems relating to bait-andswitch tactics and hidden add-on and 

other charges. For example, in a recent 

enforcement action, filed after 

publication of the NPRM, the 

Commission charged several auto dealer 

locations in an auto dealership group 

with misrepresenting the price of 

vehicles. According to the complaint, 

the dealers advertised one price to lure 

consumers to their dealerships, then 

charged them hundreds to thousands of 

dollars more than the advertised price 

by tacking on bogus extra fees for 

inspection, reconditioning, preparation, 

and certification.101 The action also 

addressed the practice of dealers 

charging Black and Latino consumers 

these fees more often and in higher 

amounts.102

Multiple actions by partners since 

publication of the Commission’s NPRM 

have involved auto add-ons. The 

Commission and the State of Wisconsin 

alleged that a dealership group, its 

current and former owners, and its 

general manager deceived consumers by 

tacking on hundreds or even thousands 

of dollars for add-ons without those 

consumers’ authorization or by leading 

the consumers to believe the add-ons 

were mandatory, and doing so 

disproportionately more frequently with 

American Indian customers.103 The 

CFPB and the New York State Office of 

the Attorney General alleged that a 

subprime auto lender knew or recklessly 

disregarded that dealers were tricking 

borrowers into purchasing add-on 

products without their knowledge or 

consent and had incentivized such 

behavior.104 In addition, the 

Commonwealth of Massachusetts has 

brought two recent cases involving 

unfair add-on pricing practices.105 In 

one such case, Massachusetts 

emphasized the dynamics of auto 

transactions that frequently lead to 

deceptive and unfair practices, 

particularly with respect to add-ons, 

noting that add-on products ‘‘are often 

sprung on consumers in the final steps 

of completing a transaction’’ after 

‘‘multiple rounds of negotiation on the 

price of a car and/or car financing.’’ 106

Efforts to combat deceptive and unfair 

practices in the motor vehicle industry 

since the NPRM have gone beyond 

enforcement actions. The CFPB 

announced that it uncovered several 

unlawful practices through supervisory 

examinations, including auto loan 

servicers charging for add-ons that 

provide no benefit to the consumer 107

and failing to ensure consumers 

received refunds for add-on products 

that no longer offered any benefits.108 In 

addition, the State of California enacted 

new legislation that regulates a 

particular type of add-on product—GAP 

agreements.109 A press release 

introducing the legislation cited 

concerns about unfair practices in the 

sale of GAP agreements, stating that this 

add-on has little value and is often 

targeted at consumers with lower 

incomes and subprime credit.110

California’s law requires several 

disclosures related to GAP agreements, 

including disclosures pertaining to their 

financed cost and informing consumers 

that such products are optional.111 The 

law also prohibits the sale of GAP 

agreements that will not actually cover 

consumers’ debt.112

Despite the array of actions by the 

Commission and its partners, unfairness 

and deception continue in the motor 

vehicle marketplace, including (1) 

deceptive or unfair sales and advertising 

tactics and (2) hidden charges, 

particularly with respect to add-on 

products or services. To address the 

harm these issues inflict on consumers 

and on law-abiding dealers, the Final 

Rule, in general: 

• Prohibits dealers from making 

misrepresentations regarding material 

information, including about the cost of 

the vehicle, the financing terms, and the 

availability of rebates or discounts; 

• Requires dealers to disclose the 

offering price of the vehicle—its full 

cash price, provided that dealers may 

exclude required government charges; 

that optional add-ons are not required; 

the total of payments for the vehicle 

when making a representation about 

monthly payment; and that a discussed 

lower monthly payment will increase 


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Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 601 

113Regarding the thousands of comments 

received, the Commission notes that many 

commenters raised similar concerns or addressed 

overlapping issues. To avoid repetition, the 

Commission has endeavored to respond to issues 

raised in similar comments together. Responses 

provided in any given section apply equally to 

comments addressing the same subject in the 

context of other sections. Moreover, throughout the 

SBP, the Commission discusses justifications for the 

Final Rule that are informed by its careful 

consideration of all comments received, even where 

that discussion is not linked to a particular 

comment. 

114The proposed authority provision in the 

NPRM omitted the second reference to ‘‘unfair’’ acts 

or practices with regard to the proposed 

recordkeeping requirements; the Final Rule 

consistently refers to both ‘‘unfair’’ and ‘‘deceptive’’ 

acts or practices together. 

115One industry group argued that the proposed 

rule violated the APA because it did not comply 

with the FTC’s rule requiring publication of an 

Advance Notice of Proposed Rulemaking (‘‘ANPR’’), 

16 CFR 1.10. Section 1.10, however, like the rest of 

subpart B of part 1 of the Commission’s Rules of 

Practice, applies only to ‘‘proceedings for the 

promulgation of rules as provided in section 

18(a)(1)(B) of the Federal Trade Commission Act.’’ 

16 CFR 1.7. The ANPR requirement in section 1.10 

implements section 18(b)(2) of the FTC Act, which 

requires an ANPR when the Commission 

promulgates rules under the procedures set forth in 

that section. In this case, the FTC is acting under 

statutory authority under section 1029(d) of the 

Dodd-Frank Act, see NPRM at 42031, which 

authorizes the Commission to promulgate rules 

using the APA’s informal notice-and-comment 

procedure, see 5 U.S.C. 553, notwithstanding the 

additional procedural requirements set forth in 

section 18. Accordingly, this rulemaking is 

governed by subpart C of part 1 of the Commission’s 

Rules of Practice, which ‘‘sets forth procedures for 

the promulgation of rules under authority other 

than section 18(a)(1)(B) of the FTC Act.’’ 16 CFR 

1.21. Neither subpart C nor the APA requires 

publication of an ANPR. 

This is consistent with Commission practice in 

prior notices to issue or amend regulations, 

including with the Made in USA Labeling Rule, the 

Children’s Online Privacy Protection Act Rule, and 

the Telemarketing Sales Rule. See, e.g., Fed. Trade 

Comm’n, Notice of Proposed Rulemaking, Made in 

USA Labeling Rule, 85 FR 43162 (July 16, 2020), 

https://www.govinfo.gov/content/pkg/FR-2020-07-

16/pdf/2020-13902.pdf (issuing original notice of 

proposed rulemaking that was not preceded by an 

advance notice of proposed rulemaking); Fed. Trade 

Comm’n, Notice of Proposed Rulemaking, 

Children’s Online Privacy Protection Rule, 64 FR 

22750 (Apr. 27, 1999), https://www.govinfo.gov/ 

content/pkg/FR-1999-04-27/pdf/99-10250.pdf 

(same); Fed. Trade Comm’n, Notice of Proposed 

Rulemaking, Telemarketing Sales Rule, 60 FR 8313 

(Feb. 14, 1995), https://www.govinfo.gov/content/ 

pkg/FR-1995-02-14/pdf/95-3537.pdf (same); Fed. 

Trade Comm’n, Notice of Proposed Rulemaking, 

Telemarketing Sales Rule, 78 FR 41200 (July 19, 

2013), https://www.govinfo.gov/content/pkg/FR2013-07-09/pdf/2013-12886.pdf (issuing notice of 

proposed rulemaking for rule amendment that was 

not preceded by an advance notice of proposed 

rulemaking); Fed. Trade Comm’n, Proposed Rule, 

Children’s Online Privacy Protection Rule, 76 FR 

59804 (Sept. 27, 2011), https://www.govinfo.gov/ 

content/pkg/FR-2011-09-27/pdf/2011-24314.pdf 

(same); Fed. Trade Comm’n, Notice of Proposed 

Rulemaking, Telemarketing Sales Rule, 74 FR 41988 

(Aug. 19, 2009), https://www.govinfo.gov/content/ 

pkg/FR-2009-08-19/pdf/E9-19749.pdf (same); Fed. 

Trade Comm’n, Notice of Proposed Rulemaking, 

Children’s Online Privacy Protection Rule, 70 FR 

2580 (Jan. 14, 2005), https://www.govinfo.gov/ 

content/pkg/FR-2005-01-14/pdf/05-877.pdf (same); 

Fed. Trade Comm’n, Notice of Proposed 

Rulemaking, Telemarketing Sales Rule, 69 FR 67287 

(Nov. 17, 2004), https://www.govinfo.gov/content/ 

pkg/FR-2004-11-17/pdf/04-25470.pdf (same); Fed. 

Trade Comm’n, Notice of Proposed Rulemaking, 

Telemarketing Sales Rule, 69 FR 7330 (Feb. 13, 

2004), https://www.govinfo.gov/content/pkg/FR2004-02-13/pdf/04-3287.pdf (same); Fed. Trade 

Comm’n, Notice of Proposed Rulemaking, 

Telemarketing Sales Rule, 67 FR 4492 (Jan. 30, 

2002), https://www.govinfo.gov/content/pkg/FR2002-01-30/pdf/02-1998.pdf (same); Fed. Trade 

Comm’n, Notice of Proposed Rulemaking, 

Children’s Online Privacy Protection Rule, 66 FR 

54963 (Oct. 31, 2001), https://www.govinfo.gov/ 

content/pkg/FR-2001-10-31/pdf/01-27390.pdf 

(same). This is also true of regulation amendments 

pursuant to the authority under which this Final 

Rule is promulgated—that which Congress granted 

to the Commission under section 1029 of the DoddFrank Act, 15 U.S.C. 5519, pertaining to motor 

vehicle dealers. See, e.g., Fed. Trade Comm’n, 

Notice of Proposed Rulemaking, Used Motor 

Vehicle Trade Regulation Rule, 77 FR 74746, 74748 

(Dec. 17, 2012), https://www.govinfo.gov/content/ 

pkg/FR-2012-12-17/pdf/2012-29920.pdf (‘‘Because 

the Dodd-Frank Act authorized the Commission to 

use APA procedures for notice and public comment 

in issuing or amending rules with respect to motor 

vehicle dealers, the FTC will not use the procedures 

set forth in Section 18 of the FTC Act, 15 U.S.C. 

57a, with respect to these proposed revisions to the 

Used Car Rule and the Used Car Buyers Guide. 

Accordingly, the Commission is publishing this 

Notice of Proposed Rulemaking pursuant to Section 

553 of the APA.’’); see also Fed. Trade Comm’n, 

Notice of Proposed Rulemaking, Privacy of 

Consumer Financial Information Rule Under the 

Gramm-Leach-Bliley Act (‘‘Privacy Rule’’), 84 FR 

13150 (Apr. 4, 2019), https://www.govinfo.gov/ 

content/pkg/FR-2019-04-04/pdf/2019-06039.pdf 

(issuing notice of proposed rulemaking for rule 

amendment that was not preceded by an advance 

notice of proposed rulemaking). 

This same commenter argued the FTC had not 

complied with the ‘‘Principles of Regulation’’ 

enumerated in section 1(b) of Executive Order 

12866. See Comment of Nat’l Auto. Dealers Ass’n, 

Doc. No. FTC–2022–0046–8368 at 34–36 & n.123; 

E.O. 12866 3(b) (defining ‘‘Agency’’ to mean an 

authority of the United States ‘‘other than those 

considered to be independent regulatory agencies’’). 

This provision of the Executive Order does not 

apply to independent agencies such as the FTC. 

Regardless, the Commission did take into account 

the principles set forth in section 1(b), as is evident 

throughout the NPRM. See, e.g., NPRM at 42015– 

17 (identifying problems in the marketplace); id. at 

42028–42031 (soliciting comments on alternative 

approaches); id. at 42036–42044 (assessing costs 

and benefits). 

The same commenter also argued that the 

Commission’s denial of its request to extend the 

comment period prejudiced the commenter’s ability 

to collect and provide data pertaining to the 

proposed rule and was inconsistent with the 

Commission’s grant of extensions in other 

rulemakings. As described in its letter, the 

Commission also received requests opposing an 

extension of the comment period. See Letter, Fed. 

Trade Comm’n, ‘‘Duration of the Public Comment 

Period in Matter No. P204800’’ (Aug. 23, 2022), 

https://www.ftc.gov/system/files/ftc_gov/pdf/ 

Matter%20No.%20204800%20-%20Letter%

20re%20Extension%20for%20publication.pdf. In 

the letter, the Commission noted its ongoing 

engagement with stakeholders on issues relating to 

the sale, financing, and lease of motor vehicles, 

since before its 2011 Federal Register notice 

inviting stakeholder feedback on these issues and 

continuing since that time. See Fed. Trade Comm’n, 

Public Roundtables: Protecting Consumers in the 

Sale and Leasing of Motor Vehicles, 76 FR 14,014 

(Mar. 15, 2011), https://www.federalregister.gov/ 

documents/2011/03/15/2011-5873/publicroundtables-protecting-consumers-in-the-sale-andleasing-of-motor-vehicles. The Commission 

determined that a sixty-day comment period, along 

with an additional twenty days following the public 

announcement and release of the NPRM and prior 

to its publication in the Federal Register, provided 

meaningful opportunity to comment. See also 

Steven J. Balla, ‘‘Public Commenting on Federal 

Agency Regulations: Research on Current Practices 

Continued 

the total amount the consumer will pay, 

if true; 

• Prohibits dealers from charging for 

add-on products or services that provide 

no benefit to the consumer; and 

• Requires dealers to obtain express, 

informed consent from the consumer for 

any charge. 

As discussed in the section-by section 

analysis in SBP III and in response to 

comments, the Commission is declining 

to finalize certain provisions proposed 

in the NPRM, including the provision 

that dealers must disclose a list of prices 

for all optional add-on products or 

services, and the provision that dealers 

must obtain certain signed declinations 

from consumers prior to charging for 

optional add-on products or services. 

The Commission also is finalizing the 

defined terms ‘‘Covered Motor Vehicle’’ 

and ‘‘Covered Motor Vehicle Dealer’’ to 

reflect edits to narrow the scope of these 

definitions compared to the scope of the 

terms ‘‘Motor Vehicle’’ and ‘‘Motor 

Vehicle Dealer’’ in the NPRM. 

III. Section-by-Section Analysis 

The following discussion provides a 

section-by-section analysis that states 

the provisions proposed in the NPRM, 

and discusses the comments received, 

the Commission’s responses to 

comments, and the provisions adopted 

in the Final Rule.113

A. § 463.1: Authority 

Section 463.1 states that the Final 

Rule is promulgated pursuant to section 

1029 of the Dodd-Frank Act, and that it 

is an unfair or deceptive act or practice 

within the meaning of section 5(a)(1) of 

the FTC Act to violate, directly or 

indirectly, any provision of the Final 

Rule, including the recordkeeping 

requirements, which are necessary to 

prevent such unfair or deceptive acts or 

practices and to enforce this Rule.114

The prohibition against violating any 

applicable provision ‘‘directly or 

indirectly’’ applies to each section of 

part 463. As discussed in SBP I.A, 

section 1029 authorizes the FTC to 

prescribe rules under Sections 5 and 

18(a)(1)(B) of the FTC Act with respect 

to motor vehicle dealers predominantly 

engaged in the sale and servicing of 

motor vehicles, the leasing and 

servicing of motor vehicles, or both.115


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and Recommendations to the Administrative 

Conference of the United States’’ App. A (2011), 

https://www.acus.gov/sites/default/files/ 

documents/Consolidated-Reports-%2BMemoranda.pdf (reporting data from a pool of 703 

comment periods associated with actions by dozens 

of Federal agencies, and finding that the average 

duration of comment periods for proposed agency 

actions was 38.7 days, and 45.1 days for actions that 

are economically significant). 

116 15 U.S.C. 57a(a)(1)(B) (the Commission ‘‘may 

include requirements prescribed for the purpose of 

preventing’’ unfair or deceptive acts or practices). 117 §§ 463.3(b), 463.4(c), 463.5(a). 

118 Individual commenter, Doc. No. FTC–2022– 

0046–7445 at 10–11. 

119 § 463.3(b) (emphasis added). 

120See §§ 463.2(k) (defining Offering Price), 

463.4(a) (requiring disclosure of Offering Price); see 

also § 463.3(p) (prohibiting misrepresentations 

regarding the disclosures required by the Final 

Rule). 

121See NPRM at 42044, 42046 (proposed 

§§ 463.2(b), 463.4(b), 463.5(b)). 

The Final Rule defines with specificity 

certain unfair or deceptive acts or 

practices; the Final Rule provisions are 

also ‘‘prescribed for the purpose of 

preventing such acts or practices.’’ 116

B. § 463.2: Definitions 

1. Overview 

The proposed rule included 

definitions for the following terms: 

‘‘Add-on’’ or ‘‘Add-on Product(s) or 

Service(s)’’; ‘‘Add-on List’’; ‘‘Cash Price 

without Optional Add-ons’’; ‘‘Clearly 

and Conspicuously’’; ‘‘Dealer’’ or 

‘‘Motor Vehicle Dealer’’; ‘‘Express, 

Informed Consent’’; ‘‘GAP Agreement’’; 

‘‘Government Charges’’; ‘‘Material’’ or 

‘‘Materially’’; ‘‘Motor Vehicle’’; and 

‘‘Offering Price.’’ In the definition-bydefinition analysis in SBP III.B.2, the 

Commission discusses each definition 

proposed in the NPRM, relevant 

comments that are not otherwise 

addressed in the discussion of the 

corresponding substantive provisions of 

the Final Rule, and the definition the 

Commission is finalizing. 

2. Definition-by-Definition Analysis 

(a) Add-On or Add-On Product(s) or 

Service(s) 

The proposed rule defined ‘‘Add-on’’ 

or ‘‘Add-on Product(s) or Service(s)’’ as 

‘‘any product(s) or service(s) not 

provided to the consumer or installed 

on the vehicle by the motor vehicle 

manufacturer and for which the Motor 

Vehicle Dealer, directly or indirectly, 

charges a consumer in connection with 

a vehicle sale, lease, or financing 

transaction.’’ This term appeared in the 

following definitions and substantive 

provisions of the rule proposal: the 

definitions of ‘‘Add-on List’’ and ‘‘Cash 

Price without Optional Add-ons’’; the 

Prohibited Misrepresentations provision 

at proposed § 463.3(b); the add-on list 

disclosure provision at proposed 

§ 463.4(b); the requirement to disclose 

that add-ons are not required at 

proposed § 463.4(c); the prohibition 

against charging for add-ons that 

provide the consumer no benefit at 

proposed § 463.5(a); and the proposed 

provision relating to undisclosed or 

unselected add-ons at § 463.5(b). As 

discussed in the following paragraphs, 

in response to stakeholder comments, 

the Commission declines to finalize 

certain of these provisions; in the Final 

Rule, this term appears in paragraph (a) 

of the Prohibited Misrepresentations 

section (§ 463.3); the Disclosure 

Requirements provision in paragraph (c) 

of § 463.4; and the provision in 

§ 463.5(a) titled ‘‘Dealer Charges for 

Add-ons and Other Items’’ and subtitled 

‘‘Add-ons that provide no benefit.’’ 

For the following reasons, the 

Commission adopts the definition of 

‘‘Add-on’’ or ‘‘Add-on Product(s) or 

Service(s)’’ largely as proposed, with 

conforming modifications to reflect 

changes to the defined terms ‘‘‘Covered 

Motor Vehicle’ or ‘Vehicle’’’ and 

‘‘‘Covered Motor Vehicle Dealer’ or 

‘‘Dealer’’’ as described in more detail in 

the discussion of § 463.2(e) and (f), in 

SBP III.B.2(e) and (f). 

The Commission received several 

comments relating to the scope of its 

proposed definition for ‘‘Add-on’’ or 

‘‘Add-on Product(s) or Service(s).’’ 

Industry association and other 

commenters recommended that the 

Commission broaden the definition to 

include manufacturer-provided 

products or services, expressing concern 

that exclusion of such products or 

services would put other companies that 

provide such items at a competitive 

disadvantage. Products or services 

provided by manufacturers, however, 

are already covered by several 

provisions of the Final Rule. Under the 

substantive provisions the Commission 

is finalizing, dealers are prohibited from 

making misrepresentations regarding 

material information, including about 

the ‘‘costs or terms of purchasing, 

financing, or leasing a Vehicle’’ 

(§ 463.3(a)); must disclose the vehicle’s 

true ‘‘Offering Price,’’ which includes 

any amounts dealers charge for items 

already installed or provided by the 

manufacturer (§§ 463.4(a) and 463.2(k)); 

and are required to obtain ‘‘Express, 

Informed Consent’’ for charges for any 

item (§§ 463.5(c) and 463.2(g)). The 

additional substantive add-on-specific 

provisions 117 address harms associated 

with products or services not provided 

to the consumer or installed on the 

vehicle by the motor vehicle 

manufacturer. Commenters did not 

provide evidence that the proposed 

provisions covering manufacturerprovided products or services would be 

insufficient to address consumer harm. 

Accordingly, the Commission has 

determined not to include 

manufacturer-provided products or 

services within this defined term. The 

Commission will continue to monitor 

this issue to determine whether 

additional action is warranted. 

One individual commenter expressed 

concern that, under the Commission’s 

proposed definition, dealers could raise 

the price of a vehicle by advertising 

additional products or services, such as 

‘‘free lifetime benefits’’ with the vehicle, 

and that dealers could mislead 

consumers by charging more for the 

vehicle based on a supposedly ‘‘free’’ 

add-on.118 The Commission notes that 

the Rule the Commission is finalizing 

contains several provisions relating to 

this concern. For example, dealers are 

prohibited from making 

misrepresentations under § 463.3, 

including misrepresentations regarding 

‘‘costs, limitation, benefit, or any other 

aspect’’ of add-ons.119 Furthermore, 

dealers are required to disclose a 

vehicle’s offering price, which must 

include charges for required add-ons; 

this disclosure will allow consumers to 

know the true price of the vehicle and 

comparison shop before selecting and 

visiting a particular dealership.120

Several dealership association 

commenters expressed concern that the 

proposed definition was too broad, 

contending that it might apply to 

hundreds of items and include fees, 

such as a processing or document fee, 

that a dealer charges a consumer. As 

discussed in SBP III.B.2(b), III.D.2(b), 

and III.E.2(b), upon careful review of 

comments, including comments 

regarding the breadth of this 

requirement, the Commission has 

determined not to finalize the provision 

that would have required listing all 

optional add-ons—the ‘‘Add-on List’’ 

definition and the associated 

requirement that dealers disclose such a 

list—as well as proposed § 463.5(b) 

relating to undisclosed or unselected 

add-ons.121 The remaining substantive 

provisions that use the term ‘‘Add-ons’’ 

prohibit misrepresentations (§ 463.3(b)); 

require dealers to disclose, if true, that 

add-ons are not required (§ 463.4(c)); 

and prohibit charges for add-ons that 

provide the consumer no benefit 

(§ 463.5(a)). The law already prohibits 

misrepresentations, regardless of the 

product or service at issue; dealers that 

offer consumers additional products or 

services are already required to ask 


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122Comment of Serv. Cont. Indus. Council, 

Guaranteed Asset Prot. All., & Motor Vehicle Prot. 

Prods. Ass’n, Doc. No. FTC–2022–0046–8113 at 13– 

14. 

123 Id. at 13. 

124See, e.g., English v. Gen. Elec. Co., 496 U.S. 

72, 79 (1990). 

125See 15 U.S.C. 1012(b). 

126See Union Labor Life Ins. Co. v. Pireno, 458 

U.S. 119, 129 (1982) (setting forth test for whether 

an activity constitutes the ‘‘business of insurance’’); 

Humana Inc. v. Forsyth, 525 U.S. 299, 307–08 

(1999) (establishing criteria for whether a Federal 

law operates to ‘‘invalidate, impair, or supersede’’ 

State law). 

127The Supreme Court has refused to interpret 

the McCarran Ferguson Act to invalidate Federal 

law when applied to remedy a misrepresentation 

and undo the harm caused by alleged deception. 

See SEC v. Nat’l Sec., Inc., 393 U.S. 453, 462 (1969). 

Moreover, lower courts have rejected precisely the 

concern raised by the commenter about credit life 

insurance. See Fed. Trade Comm’n. v. Dixie Fin. 

Co., 695 F.2d 926, 930 (5th Cir. 1983) (McCarran 

Ferguson Act does not preclude FTC investigation 

of ‘‘whether the sale of insurance is a precondition 

to the arrangement of credit’’); Fed. Trade Comm’n 

v. Mfrs. Hanover Consumer Servs., Inc., 567 F. 

Supp. 992, 94 (E.D. Pa. 1983) (same). 

consumers if they want such products, 

rather than suggesting that such 

products or services are mandatory, 

when they are not; and any hardship 

associated with refraining from charging 

for products or services that provide 

consumers no benefits are outweighed 

by the harms to consumers and 

competition from permitting this 

practice, as explained in the analysis of 

§ 463.5(a). 

Commenters including an industry 

association suggested limiting the 

definition to products or services sold at 

the ‘‘point of vehicle purchase’’ to 

clarify that indirect charges, such as the 

inclusion of a one-year subscription to 

a satellite radio service, need not be 

separately itemized.122 The industry 

association commenter suggested that, 

as proposed, the definition would 

include charges for which dealers and 

consumers ‘‘would otherwise not 

account.’’ 123 The Commission has 

determined not to finalize the add-on 

list and form requirements in proposed 

§§ 463.4(b) and 463.5(b). For the 

provisions being finalized, excluding 

subscription charges, or including only 

items added to the vehicle at the ‘‘point 

of vehicle purchase,’’ would narrow the 

definition of ‘‘Add-on’’ and the 

corresponding requirements in a 

manner that would allow for deceptive 

or unfair practices, including by 

allowing dealers to represent a price 

that is not the offering price, or to 

deceptively state that add-ons are 

required. In the example provided by 

the commenter, if the satellite radio 

subscription service is mandatory, it 

needs to be included in the offering 

price of the vehicle, as required by 

§ 463.4(a) of the Final Rule; if it is not 

mandatory, the dealer needs to disclose, 

when making any representations about 

the service, that it is not required under 

§ 463.4(c). Further, regardless of 

whether such a product or service is 

mandatory or optional, dealers must 

follow other aspects of the Final Rule, 

including by not making any 

misrepresentations about the 

subscription under § 463.3 and by 

obtaining the express, informed consent 

of the consumer for the associated 

charges under § 463.5(c). 

Another industry association 

commenter contended that add-ons sold 

in the marine industry are typically 

different than those offered in the 

context of automobile sales and 

described in the NPRM. While all motor 

vehicle dealers must refrain from 

engaging in deceptive or unfair conduct 

relating to add-ons, the Commission is 

excluding recreational boats and marine 

equipment from the Final Rule’s 

definition of ‘‘ ‘Covered Motor Vehicle’ 

or ‘Vehicle,’ ’’ as discussed in additional 

detail in the definition-by-definition 

analysis of § 463.2(e) in SBP III.B.2(e). 

An industry association commenter 

and comments from a number of 

dealership associations noted that 

certain State laws already regulate the 

sale of add-ons, including, for example, 

laws in many States that regulate 

vehicle sales contracts or deceptive 

sales practices generally or that regulate 

insurance products. To the extent that 

the Final Rule’s add-on provisions may 

duplicate State law, commenters have 

provided no evidence that any such 

duplication in the provisions that 

incorporate this defined term—which 

prohibit misrepresentations, require 

disclosures in the event add-ons are not 

required, and prohibit charges for addons from which the consumer would 

not benefit—will harm consumers or 

competition. Moreover, the Final Rule 

provides additional remedies that will 

benefit consumers who encounter 

conduct that is already illegal under 

State or Federal law, including by 

adding a mechanism for the 

Commission to redress consumers 

injured by a dealer’s violation of the 

rule, and will assist law-abiding dealers 

that presently lose business to 

competitors that act unlawfully. Under 

the Final Rule, State laws may provide 

more or less specific requirements as 

long as such requirements are not 

inconsistent with part 463, as set forth 

at § 463.9, and in the event of an 

inconsistency, the Rule only affects 

such State law to the extent of the 

inconsistency.124

A few dealership association 

commenters expressed concern that the 

proposed definition of ‘‘Add-on 

Products or Services’’ would include 

insurance-related products, such as 

credit life and credit disability 

insurance, and as such, could implicate 

the McCarran-Ferguson Act’s reversepreemption of certain Federal laws that 

‘‘invalidate, impair, or supersede’’ State 

laws enacted ‘‘for the purpose of 

regulating the business of 

insurance.’’ 125 Commenters have 

provided no evidence that the Rule will 

invalidate, impair, or supersede State 

laws enacted for the purpose of 

regulating the business of insurance.126

To the contrary, the Final Rule 

addresses deceptive or unfair conduct— 

it prohibits dealers, inter alia, from 

making misrepresentations regarding 

material information about add-ons, 

from failing to disclose when add-ons 

are not required, and from charging for 

add-ons from which the consumer 

would not benefit. Nor has the 

Commission been presented with 

evidence that the Rule’s other 

substantive provisions (prohibiting 

misrepresentations; requiring 

disclosures of a vehicle’s offering price 

and about total of payments; and 

requiring consumers’ express, informed 

consent before charging them) 

invalidate, impair, or supersede State 

laws enacted for the purpose of 

regulating insurance.127

A number of industry and dealership 

association commenters contended that, 

as proposed, this definition may extend 

to products or services that are provided 

by the manufacturer but that are 

installed by a distributor of motor 

vehicles, or alternatively, by the dealer, 

at the instruction of the manufacturer. 

Relatedly, a State governmental 

association commenter expressed 

concern that the proposed definition 

could create confusion with regard to 

the sale of used vehicles, where a prior 

owner of a vehicle may have added a 

product to the vehicle. The commenter 

contended that a motor vehicle dealer 

selling the used vehicle may be unaware 

of the added product, and further, that 

listing any such items may confuse 

buyers. 

To the extent the commenters’ 

concerns stem from the proposed 

provisions related to add-on lists and 

proposed § 463.5(b)’s provisions related 

to separate disclosures, the Commission 

is not finalizing those provisions. Under 

the provisions being finalized, if a 

product is provided to the dealer by the 

manufacturer or another entity, and a 

consumer chooses to have the product 


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128The language requirements, as they relate to 

obtaining express, informed consent, are further 

explained in the discussion of § 463.5(c) in SBP 

III.E.2(c). 

installed and pay for it, the dealer may 

install it and charge for it, as long as the 

dealer complies with the provisions of 

the Final Rule, including by disclosing 

that the product is not required and by 

obtaining the consumer’s express, 

informed consent for the charge. If the 

manufacturer requires the dealer to 

install the product or if the dealer 

chooses to install the product, and the 

dealer requires any consumer to pay 

charges for it, the amount of the charge 

must be included in the vehicle’s 

offering price, and the dealer must 

comply with other aspects of the Final 

Rule, including the express, informed 

consent requirement. Relatedly, 

regarding used vehicles, if a prior owner 

of such a vehicle installed an add-on, 

and the dealer that subsequently sells 

such a vehicle requires any consumer to 

pay charges for the add-on, the amount 

of those charges must be included in the 

vehicle’s offering price and the dealer 

must comply with other aspects of the 

Final Rule, including the express, 

informed consent requirement at 

§ 463.5(c). If, alternatively, the dealer 

does not require any consumers to pay 

for the pre-installed add-on, then the 

dealer does not have to add that amount 

to the vehicle’s offering price, and there 

is no charge for that add-on for which 

the dealer must obtain express, 

informed consent. Thus, the definition 

of ‘‘Add-on’’ and the Rule requirements 

being finalized address deceptive or 

unfair price and add-on disclosures and 

hidden charges without requiring 

dealers to list or itemize charges that 

they do not impose on consumers. For 

the reasons explained in this section, 

the Commission is finalizing the 

definition of ‘‘Add-on’’ or ‘‘Add-on 

Product(s) or Service(s)’’ largely as 

proposed, with conforming 

modifications to reflect changes to the 

defined terms ‘‘‘Covered Motor Vehicle’ 

or ‘Vehicle’’’ and ‘‘‘Covered Motor 

Vehicle Dealer’ or ‘Dealer’’’ as described 

in more detail in the discussion of 

§ 463.2(e) and (f), in SBP III.B.2(e) and 

(f). 

(b) Add-On List 

The NPRM proposed defining the 

term ‘‘Add-on List,’’ which appeared in 

the associated Add-on List disclosure 

provision at proposed § 463.4(b), as well 

as in the recordkeeping provision at 

proposed § 463.6(a)(2). Based on the 

following, the Commission has 

determined not to include this 

definition in its Final Rule. 

Several commenters supported the 

substantive add-on list proposal and its 

associated definition, and commenters 

including consumer advocacy 

organizations urged the Commission to 

finalize additional related restrictions or 

disclosures, such as requiring add-on 

prices to be fixed and non-negotiable, or 

requiring a distinct add-on list for each 

vehicle sold. Other commenters, 

including dealership associations, 

raised concerns that, as proposed, the 

add-on list definition could impose 

significant economic burdens on 

dealerships for a disclosure that, in 

some circumstances, might be too 

voluminous to be optimally meaningful 

to consumers, or permit price ranges 

that could be too broad to prevent 

abuses and effectively inform 

consumers. 

After careful consideration, and in 

light of the concerns raised by 

commenters, the Commission has 

determined not to include the add-on 

list disclosure provision at proposed 

§ 463.4(b) or the recordkeeping 

provision at proposed § 463.6(a)(2) in its 

Final Rule, and therefore will not 

include a definition of the term ‘‘Addon List’’ in its Final Rule. Here, as 

elsewhere, the Commission remains 

committed to promoting fair, nondeceptive, and competitive markets for 

consumer products and services; it will 

continue to monitor the marketplace for 

add-on-related acts or practices that are 

unfair or deceptive, and will evaluate 

whether to propose additional measures 

pertaining to such products and 

services. 

(c) Cash Price Without Optional AddOns 

The NPRM proposed defining the 

term ‘‘Cash Price without Optional Addons,’’ which appeared in the proposed 

provision addressing undisclosed or 

unselected add-ons at § 463.5(b). Based 

on the following, the Commission is 

declining to finalize this definition. 

A number of commenters favored the 

proposed provision and definition, and 

several, including consumer advocacy 

organizations, urged the Commission to 

include additional requirements, such 

as requiring the proposed disclosure 

documents associated with this 

proposed definition to be available in 

different languages, while others, 

including a dealership association, 

raised concerns that the definition and 

relevant provision were burdensome or 

confusing for dealers. 

As explained in additional detail in 

SBP III.E.2(b) with respect to § 463.5(b), 

in light of commenter concerns that the 

proposed provision using this term 

would increase costs for legitimate 

dealers and add to the time and 

paperwork for consumers in an already 

lengthy, paperwork-heavy transaction, 

the Commission has elected not to 

include a Cash Price without Optional 

Add-ons disclosure requirement in its 

Final Rule. Thus, after careful 

consideration, and in light of the 

concerns raised by commenters, the 

Commission has determined not to 

include a definition of ‘‘Cash Price 

without Optional Add-ons’’ in its Final 

Rule. 

(d) Clearly and Conspicuously 

The proposed rule defined the term 

‘‘Clearly and Conspicuously’’ as ‘‘in a 

manner that is difficult to miss (i.e., 

easily noticeable) and easily 

understandable,’’ including in all of 

seven enumerated ways, listing 

proposed requirements for ‘‘any 

communication that is solely visual or 

solely audible,’’ ‘‘[a] visual disclosure,’’ 

‘‘[a]n audible disclosure,’’ and ‘‘any 

communication using an interactive 

electronic medium,’’ and providing, 

inter alia, that such disclosures ‘‘must 

use diction and syntax understandable 

to ordinary consumers and must appear 

in each language in which the 

representation that requires the 

disclosure appears’’ and ‘‘must not be 

contradicted or mitigated by, or 

inconsistent with, anything else in the 

communication.’’ Based on the 

following, the Commission is finalizing 

this definition largely as proposed, with 

a modification to clarify that the 

definition applies whether the term 

appears as an adjective or an adverb, by 

adding the parentheses in the following 

manner to the defined term: ‘‘Clear(ly) 

and Conspicuous(ly).’’ 

Some consumer advocacy 

organization commenters favored the 

Commission’s proposed definition 

while also suggesting that the 

Commission include a provision 

requiring translation of any deal 

consummating documents, including 

buyer’s orders and retail installment 

sales contracts, into the language in 

which the negotiations were conducted. 

This issue, however, is addressed by 

§ 463.5(c) of the Rule, which requires 

express, informed consent for each item 

charged.128 As explained in additional 

detail in the paragraph-by-paragraph 

analysis of § 463.5(c) in SBP III.E.2(c), if 

a deal-consummating document is 

provided in a language that the 

consumer does not understand, and the 

document’s contents are not otherwise 

clearly understood by the consumer, 

then the consumer is in no position to 

give unambiguous assent to the charges 

described therein. The Commission 

therefore has determined not to add 


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Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 605 

129 16 CFR 14.9 is an enforcement policy 

statement that provides information to advertisers 

about clear and conspicuous disclosures in foreign 

language advertisings and sales materials, including 

ensuring the language of the disclosure matches the 

language in the publication. See 16 CFR 14.9. 

130See Appear (defs. 1b, 4, 6), MerriamWebster.com Dictionary, https://www.merriamwebster.com/dictionary/appear (last visited Dec. 5, 

2023); see also Order ¶¶ 2–3, Asbury Auto. Grp., 

Inc., No. C–4606 (F.T.C. Mar. 22, 2017) (identical 

usage in definition provision); Order ¶ 2, Lithia 

Motors, Inc., No. C–4597 (F.T.C. Dec. 8, 2016) 

(same); Order ¶¶ 2–3, Jim Koons Mgmt. Co., No. C– 

4598 (F.T.C. Dec. 8, 2016) (same). 

131 17 CFR 162.2. 

such a provision to its ‘‘Clear(ly) and 

Conspicuous(ly)’’ definition. However, 

the Commission will continue to 

monitor the marketplace and determine 

whether further language requirements 

or additional measures are warranted to 

address deceptive or unfair practices— 

particularly those that target or 

otherwise disproportionately impact 

language-minority communities. 

Commenters, including consumer 

advocacy organizations, expressed 

concern that proposed § 463.2(d)(5) may 

be read to apply only to certain 

disclosures with triggering 

representations and only to disclosures 

that are in writing. These commenters 

also requested that the Commission 

incorporate into its Final Rule the FTC’s 

policy statement regarding foreign 

language advertising and sales 

materials, which is separately codified 

at 16 CFR 14.9.129 In response, the 

Commission notes that to be clear and 

conspicuous, the disclosure must be 

‘‘easily understandable,’’ as stated in the 

definition. If a disclosure is being made 

in a language the consumer does not 

understand, it does not meet this 

requirement. Further, the disclosures 

highlighted by the commenters are 

indeed subject to the language 

requirements of § 463.2(d)(5), which 

requires that disclosures ‘‘appear in 

each language in which the 

representation that requires the 

disclosure appears.’’ With regard to the 

offering price disclosure in § 463.4(a)(1), 

the applicable ‘‘representation that 

requires the disclosure’’ is the 

‘‘advertisement that references . . . a 

specific Vehicle’’; thus, for example, if 

an advertisement that references a 

specific vehicle is in Spanish, the 

offering price disclosure must also be in 

Spanish. Similarly, in § 463.4(a)(2), the 

applicable representation that requires 

the disclosure is an ‘‘advertisement that 

represents . . . any monetary amount or 

financing term for any Vehicle.’’ In 

§ 463.4(a)(3), the applicable 

representation is ‘‘any communication 

. . . that includes a reference . . . 

regarding a specific Vehicle, or any 

monetary amount or financing term for 

any Vehicle.’’ In § 463.4(c) and (d), ‘‘any 

representation’’ regarding an add-on 

product or service or a monthly 

payment for any vehicle, respectively, 

triggers the language requirement of 

§ 463.2(d)(5). The monthly payments 

comparison disclosure in § 463.4(e) is 

required when there is a ‘‘comparison 

between payment options . . . that 

includes discussion of a lower monthly 

payment.’’ Thus, the language 

requirements in § 463.2(d)(5) apply. 

In response to this concern regarding 

the applicability of § 463.2(d)(5) to 

disclosures that are not in writing, the 

Commission notes that its use of the 

word ‘‘appear’’ in § 463.2(d)(5) 

incorporates common meanings, such as 

‘‘to show up,’’ ‘‘to come into existence,’’ 

or ‘‘to become evident or manifest,’’ 

which cause this provision to apply 

whether the representation requiring the 

disclosure appears visually, orally, or 

otherwise.130 Where the Commission 

instead intended a provision to be 

limited to a visual disclosure, as in 

§ 463.2(d)(2), the Rule states so 

explicitly. 

In response to the request that the 

Commission incorporate into this Rule 

its policy statement regarding foreign 

language advertising and sales 

materials, separately codified at 16 CFR 

14.9, the Commission emphasizes that 

the enforcement statement sets out what 

is already impermissible under current 

law and is consistent with the 

requirements the Commission is 

finalizing. To the extent dealers take 

actions that are inconsistent with 

Commission statements about such law, 

they are risking enforcement 

proceedings by the Commission or 

others. Accordingly, the Commission 

has determined not to add to the Rule 

further requirements regarding foreign 

language advertising. The Commission 

will continue to monitor the market to 

determine whether further action is 

warranted. 

Industry association commenters 

raised concerns about how the 

Commission’s proposed definition 

interacts with other Federal laws, such 

as Regulations Z and M, which 

implement the Truth in Lending Act 

and the Consumer Leasing Act, 

respectively, and contended that it 

conflicts with a clear and conspicuous 

definition in Commodity Futures 

Trading Commission regulations.131

Industry and dealership association 

commenters contended that State 

advertising standards already address 

what constitutes ‘‘clear and 

conspicuous’’ advertising and provide 

guidance on disclosures, such that the 

FTC’s proposal will cause confusion or 

possible conflict with State law. 

The Commission’s definition of 

‘‘Clear(ly) and Conspicuous(ly)’’ is not 

inconsistent with the existing Federal 

legal requirements raised by these 

commenters. Dealers can comply with 

these laws to the extent they apply as 

well as with the requirements that 

follow from the Commission’s 

definition. Regarding State law, 

commenters did not provide examples 

of actual conflicts. Further, to the extent 

there is truly an inconsistency between 

the operation of the Commission’s 

definition and any State law, the 

Commission notes that the definition is 

based on decades of Commission 

experience policing deceptive and 

unfair conduct; addresses harmful 

practices including those related to 

hidden disclosures and charges; and 

that § 463.9 of the Final Rule sets out 

the Rule’s relation to State laws. 

Other industry association 

commenters also contended that the 

proposed definition of ‘‘Clearly and 

Conspicuously’’ would be overly broad 

and challenging for compliance, but did 

not explain why or suggest alternative 

language. In addition, some dealership 

association commenters requested more 

guidance to understand the definition. 

The Commission’s definition spells out, 

in seven subparts, what clear and 

conspicuous means, using simple terms 

that provide additional information 

about how dealers can make a 

disclosure in a manner that is easily 

understandable and easily noticeable to 

the consumer. The definition elaborates 

basic, common-sense principles, 

including that visual disclosures be in a 

size that consumers will easily notice 

and that audible disclosures be in a 

volume, speed, and cadence such that 

consumers will easily hear it. Thus, for 

example, disclosures in an illegible font, 

or that consumers cannot hear, are not 

clear and conspicuous. The Commission 

also notes that it did not mandate 

specific fonts, volumes, or other 

prescriptive measures. Thus, dealers 

have the flexibility to determine the best 

way to meet the definition’s 

requirements for their consumers under 

the circumstances. 

A dealership association commenter 

contended that the proposed definition 

does not include a reasonableness 

standard and may be interpreted as 

prohibiting any limitations and 

exclusions, given the requirement in 

proposed § 462.3(d)(7) that a disclosure 

must not be contradicted or mitigated by 

or inconsistent with anything else in the 

communication. The commenter further 

asked whether a statement such as 

‘‘with approved credit’’ would 


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606 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

132Comment of Ohio Auto. Dealers Ass’n, Doc. 

No. FTC–2022–0046–6657 at 4. 

133See FTC Policy Statement on Deception, supra 

note 42, at 2–5. 

134Complaint ¶¶ 5–7, Progressive Chevrolet Co., 

No. C–4578 (F.T.C. June 13, 2016) (alleging ads 

touting attractive terms deceptively failed to 

disclose high credit score requirement). 

135Removatron Int’l Corp. v. Fed. Trade Comm’n, 

884 F.2d 1489, 1496–97 (1st Cir. 1989); see also 

Fed. Trade Comm’n v. Brown & Williamson 

Tobacco Corp., 778 F.2d 35, 42–43 (D.C. Cir. 1985) 

(finding that a disclosure in virtually illegible form, 

placed in an inconspicuous corner of Barclay 

advertisements, did not eliminate deception); see 

Fed. Trade Comm’n v. Cap. Choice Consumer 

Credit, Inc., 2003 U.S. Dist. LEXIS 29086, at *5 (S.D. 

Fla. June 2, 2003) (finding that, where 

advertisements promised a general purpose credit 

card, such as VISA or MasterCard, ‘‘fine print on 

reverse side’’ of ad clarifying that the credit card 

was a ‘‘merchandise card and not a major bank 

card’’ was inadequate to modify net impression); 

Fed. Trade Comm’n v. Cyberspace.com LLC, 453 

F.3d 1196, 1200 (9th Cir. 2006) (rejecting 

defendant’s argument that truthful fine print notices 

on reverse side of checks, invoices, and marketing 

inserts cured deception that check/invoice was a 

refund rather than offer for services); Fed. Trade 

Comm’n v. Alcoholism Cure Corp., No. 3:10–cv– 

266–J–34JBT, 2011 WL 13137951, at * 51 (M.D. Fla. 

Sept. 16, 2011) (finding that ‘‘not MD’’ disclaimers 

were inadequate to dispel net impression regarding 

professional qualifications of defendant and other 

employees as advertised); Fed. Trade Comm’n v. 

Wash. Data Res., 856 F. Supp. 2d 1247, 1274–75 

(M.D. Fla. 2012) (rejecting defendants’ argument 

that retainer agreement contained sufficient 

disclaimer to dispel a misrepresentation about 

whether a home loan was guaranteed). 

136The Commission has included such 

requirements elsewhere. See, e.g., Order ¶ 6, United 

States v. Sunkey Publ’g, Inc., No: 3:18–cv–1444– 

HNJ (N.D. Ala. Sept. 6, 2018). 

137See. e.g., Palmer v. Champion Mortg., 465 F.3d 

24, 28 (1st Cir. 2006) (applying an objective 

standard in evaluating Truth in Lending Act claim 

regarding clear and conspicuous disclosure); Smith 

v. Check-N-Go of Ill., Inc., 200 F.3d 511, 515 (7th 

Cir. 1999) (same); Zamarippa v. Cy’s Car Sales, Inc., 

674 F.2d 877, 879 (11th Cir. 1982) (same); 

Bustamante v. First Fed. Sav. & Loan Ass’n, 619 

F.2d 360, 364 (5th Cir. 1980) (same); see also 

Herrera v. First N. Sav. & Loan Ass’n, 805 F.2d 896, 

900 (10th Cir. 1986) (resolving question of clear and 

conspicuous disclosure under Truth in Lending Act 

as a legal, rather than factual, matter); Dixey v. 

Idaho First Nat’l Bank, 677 F.2d 749 (9th Cir. 1982) 

(same). 

138Complaint ¶¶ 6–14, Jim Burke Auto., Inc., No. 

C–4523 (F.T.C. May 4, 2015); Complaint ¶¶ 6, 9, TT 

of Longwood, Inc., No. C–4531 (F.T.C. July 2, 2015); 

Complaint ¶ 13, City Nissan Inc., No. C–4524 

(F.T.C. May 4, 2015); Complaint ¶¶ 17–19, Fed. 

Trade Comm’n v. Liberty Chevrolet, Inc., No. 1:20– 

cv–03945 (S.D.N.Y. May 21, 2020); Complaint 

¶¶ 4–9, 12–15, 18–20, Billion Auto, Inc., No. C– 

4356 (F.T.C. May 1, 2012) (alleging false ads 

promising to pay off consumers’ existing motor 

vehicle debt and failing to disclose legally required 

financing and leasing terms); see also Complaint 

¶¶ 57–60, Fed. Trade Comm’n v. Stewart Fin. Co. 

Holdings, Inc., No. 1:03–CV–2648 (N.D. Ga. Sept. 4, 

2003) (alleging violations for failure to include the 

cost of required add-on products in the finance 

charge and annual percentage rate disclosed to 

consumers). 

139See FTC Policy Statement on Deception, supra 

note 42, at 2–5 (describing application of reasonable 

consumer standard). 

140See, e.g., Decision and Order, JS Autoworld, 

Inc., No. C–4535 (F.T.C. Aug. 13, 2015); Decision 

and Order, Nat’l Payment Network, Inc., No. C– 

4521 (F.T.C. May 4, 2015); Decision and Order, Matt 

Blatt Inc., No. C–4532 (F.T.C. July 2, 2015); 

Decision and Order, Ganley Ford West, Inc., No. C– 

4428 (F.T.C. Jan. 28, 2014). 

impermissibly mitigate an offer of low 

financing under this proposed 

definition.132 The Commission responds 

as follows. The standard is an objective 

one, evaluated from the perspective of a 

reasonable consumer.133 The definition 

does not prohibit all advertising that 

contains limitations and exclusions, but 

it does provide that if dealers are 

advertising offers that are limited in 

some way, they may not misrepresent 

such offers. Thus, if a dealer presents 

consumers with an unqualified 

representation of low financing terms, 

those terms must be available to typical 

consumers. Alternatively, a dealer may 

offer low financing terms to consumers 

with particular credit characteristics if 

that requirement is presented in a 

manner that does not deceive reasonable 

consumers. For example, a dealer may 

offer ‘‘0% annual percentage rate (APR) 

for consumers with a credit score above 

800.’’ By contrast, it would be deceptive 

if the dealer offered ‘‘0% APR,’’ and 

then separately disclosed in fine print 

that such terms are only available to 

consumers with a credit score above 

800, because the qualifying disclosure is 

inconsistent with an offer of ‘‘0% APR’’ 

that contained no limitations and thus 

indicated that 0% APR is available to 

the typical consumer regardless of credit 

score.134 Further, the Commission notes 

that to qualify as clear and conspicuous, 

‘‘disclaimers or qualifications in any 

particular ad are not adequate to avoid 

liability unless they are sufficiently 

prominent and unambiguous to change 

the apparent meaning of the claims and 

to leave an accurate impression. 

Anything less is only likely to cause 

confusion by creating contradictory 

double meanings.’’ 135

Lastly, another dealership association 

commenter asked how the proposed 

definition translates to visual, audible, 

and electronic media disclosures and 

expressed concern about subjectivity, 

characterizing the terms ‘‘easily’’ 

understood and ‘‘unavoidable’’ within 

the proposed definition as subjective 

and open to different interpretations, 

particularly in the context of websites 

and internet promotions. Here, the 

Commission declines to mandate more 

prescriptive language regarding, for 

example, font sizes, what volumes are to 

be used, and where exactly the language 

should appear on a website, such as on 

an overlay with mandated color, size, 

and location.136 As courts 137 have 

recognized, whether a disclosure is clear 

and conspicuous is an objective 

standard rather than a subjective one. 

While more prescriptive language 

would provide additional objective 

criteria, the Commission is concerned 

such language might constrain dealers 

from determining the best way to meet 

the definition’s requirements for their 

consumers under the circumstances 

involved, and might require dealers that 

are already making clear and 

conspicuous disclosures to change their 

existing disclosure materials. 

The Commission reiterates that the 

definition of ‘‘Clear(ly) and 

Conspicuous(ly)’’ elaborates basic, 

common-sense principles, such as 

requiring visual disclosures in a size 

consumers can see and audible 

disclosures in a volume they can hear. 

Regarding the requirement that internet 

disclosures be unavoidable, this 

language requires evaluating an 

objective standard—whether or not 

consumers could have avoided the 

disclosure. In addition, the disclosure 

must be easily noticeable and easily 

understandable, as set forth expressly in 

the definition. Disclosures that do not 

meet this standard include those that 

are buried in other text, including as 

illustrated by many FTC actions against 

dealers.138 Regarding the requirement 

that disclosures be ‘‘easily’’ noticeable 

and understandable, the standard is also 

an objective one, evaluated from the 

perspective of a reasonable consumer. 

Determining how reasonable consumers 

are likely to respond may be resolved on 

the basis of the advertisement, context, 

or disclosure itself, or based on extrinsic 

evidence, such as consumer 

complaints.139 To this end, as noted 

previously, the definition enumerates in 

seven subparts the meaning of clear and 

conspicuous using simple terms that 

provide additional guidance on how 

dealers may make disclosures that are 

easily understandable and easily 

noticeable to the consumer. 

After carefully considering the 

comments, the Commission adopts 

§ 463.2(d) with a modification to clarify, 

through the addition of parentheses— 

‘‘Clear(ly) and Conspicuous(ly)’’—that 

the definition applies whether the term 

is used as an adjective or adverb. 

Consistent with the Commission’s 

experience addressing unfair or 

deceptive conduct, the Commission has 

defined the term ‘‘Clear(ly) and 

Conspicuous(ly)’’ to include disclosures 

that are easily understandable and 

easily noticeable, while also providing 

dealers with additional information on 

how to meet those requirements.140


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Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 607 

141According to the National Highway Traffic 

Safety Administration, ‘‘Public road means any 

road under the jurisdiction of and maintained by a 

public authority and open to public travel.’’ 23 CFR 

1300.3. 

142Comment of Structured Fin. Ass’n, Doc. No. 

FTC–2022–0046–7646 at 3. 

143The Marine Retailers Association of the 

Americas requested that transactions in excess of 

$70,000 be excluded from coverage, as an 

alternative to excluding marine transactions 

altogether. See Comment of Marine Retailers Ass’n 

of the Ams., Doc. No. FTC–2022–046–9291 at 4. 

(e) Motor Vehicle (Finalized as 

‘‘ ‘Covered Motor Vehicle’ or ‘Vehicle’ ’’) 

The proposed rule defined the term 

‘‘Motor Vehicle’’ as ‘‘(1) any selfpropelled vehicle designed for 

transporting persons or property on a 

street, highway, or other road; (2) 

Recreational boats and marine 

equipment; (3) Motorcycles; (4) Motor 

homes, recreational vehicle trailers, and 

slide-in campers, as those terms are 

defined in §§ 571.3(b) and 575.103(d) of 

title 49, Code of Federal Regulations, or 

any successor thereto; and (5) Other 

vehicles that are titled and sold through 

Dealers.’’ The Commission has 

determined to finalize the definition 

with the modifications discussed in the 

following paragraphs. 

The Commission received several 

comments regarding the substance and 

scope of this proposed definition. A 

number of industry association 

commenters requested that certain 

vehicle types, including marine 

vehicles, motorcycles, RVs, and other 

recreational vehicles be excluded from 

coverage. These commenters contended 

that the dealerships that sell such 

vehicles function differently from 

automobile dealerships, and that 

recreational vehicles are discretionary, 

rather than essential, purchases. After 

careful consideration, the Commission 

is excluding recreational boats and 

marine equipment; motorcycles; and 

motor homes, recreational vehicle 

trailers, and slide-in campers from the 

definition of ‘‘ ‘Covered Motor Vehicle’ 

or ‘Vehicle.’ ’’ Moving forward, the 

Commission will continue to monitor 

for unfair and deceptive practices to 

determine whether further action is 

warranted to protect consumers, 

through law enforcement, a future 

rulemaking, or other measures. The 

Commission notes that no dealer may 

misrepresent material terms; deceive 

customers about prices, add-ons, or 

payments; charge for products that 

provide no benefit; or charge consumers 

without express, informed consent. To 

the extent that dealers engage in such 

conduct, they are in violation of the FTC 

Act. 

Another commenter contended it was 

unclear whether all-terrain vehicles, gocarts, snowmobiles, scooters, electric 

bicycles, and golf carts were covered by 

the proposed definition. In response, the 

Commission has modified the first 

enumerated subpart of the definition to 

refer only to vehicles designed for use 

on a ‘‘public’’ street, highway, or road, 

and to expressly exclude scooters, 

electric bicycles, and golf carts. The 

definition of ‘‘ ‘Covered Motor Vehicle’ 

or ‘Vehicle’ ’’ in the Final Rule does not 

cover all-terrain vehicles, go-carts, or 

snowmobiles because such vehicles are 

not designed for use on a ‘‘public’’ 

street, highway, or road.141

A number of industry association 

commenters claimed that the proposed 

definition conflicts with definitions of 

motor vehicle under various State laws, 

and one such commenter requested that, 

rather than finalize a definition of 

‘‘Motor Vehicle,’’ the Commission defer 

to the definitions promulgated by each 

State’s department of motor vehicles. 

The commenters did not explain how 

the Rule’s definition may actually 

conflict with any laws, or how any 

alleged duplication would harm 

consumers or competition. To the extent 

that States have broader or narrower 

definitions, it is not clear why motor 

vehicle dealers covered by the Rule 

cannot comply with the Rule’s 

provisions and applicable State laws. 

Moreover, the Final Rule provides 

additional remedies that will benefit 

consumers who encounter conduct that 

is already illegal under State or Federal 

law, including by adding a mechanism 

for the Commission to redress 

consumers injured by a dealer’s 

violation of the rule, and will assist lawabiding dealers that presently lose 

business to competitors that act 

unlawfully. Section 463.9 provides 

further discussion of State laws. 

Thus, after careful consideration of 

the comments, the Commission is 

finalizing the definition of ‘‘Motor 

Vehicle’’ with modifications, including 

adding the word ‘‘Covered’’ to the 

definition to reflect the fact that the 

definition is narrower than the term 

‘‘Motor Vehicle’’ in the NPRM and 

adding ‘‘or Vehicle’’ to the definition to 

clarify that all references in the Rule to 

the term ‘‘Covered Motor Vehicle’’ and 

‘‘Vehicle’’ refer to the defined term. 

(f) Dealer or Motor Vehicle Dealer 

(Finalized as ‘‘ ‘Covered Motor Vehicle 

Dealer’ or ‘Dealer’ ’’) 

The proposed rule defined the term 

‘‘Dealer’’ or ‘‘Motor Vehicle Dealer’’ as 

‘‘any person or resident in the United 

States, or any territory of the United 

States, that: (1) Is licensed by a State, a 

territory of the United States, or the 

District of Columbia to engage in the 

sale of motor vehicles; (2) Takes title to, 

holds an ownership interest in, or takes 

physical custody of motor vehicles; and 

(3) Is predominantly engaged in the sale 

and servicing of motor vehicles, the 

leasing and servicing of motor vehicles, 

or both.’’ Based on the following, the 

Commission is finalizing this definition 

in the Final Rule with modifications for 

clarity. 

Many stakeholders commented in 

support of the proposed rule and 

expressed no concern over this 

definition. Other commenters expressed 

views that the Commission examines in 

the following paragraphs. 

A few industry association 

commenters contended that parts of the 

proposed definition may have captured 

certain financial entities, such as 

financial entities that maintain licenses 

to engage in the sale of motor vehicles, 

and requested that the Commission 

make clear that any rule does not apply 

to such entities. In response, the 

Commission notes that only entities that 

meet all three components of the 

definition are covered ‘‘Dealers.’’ Thus, 

an entity that maintains an applicable 

license to engage in the sale of Covered 

Motor Vehicles but is not, for example, 

predominantly engaged in the sale or 

leasing of motor vehicles would not be 

a covered ‘‘Dealer.’’ 

Another industry association 

commenter similarly requested a ‘‘carveout’’ from any definition of ‘‘Dealer’’ for 

trusts and trusts’ investors.142 This 

commenter asserted that trusts and their 

investors do not satisfy two of the 

definition’s components and did not 

describe how any part of the definition 

creates concerns or is unclear. The 

Commission reiterates that if an entity 

meets the three parts of the ‘‘Covered 

Motor Vehicle Dealer’’ definition, then 

it is covered; if an entity does not meet 

these three parts, it is not covered. The 

Commission sees no benefit to adding 

language stating that entities that do not 

meet the definition are not covered. 

Other commenters, including vehicle 

association commenters, claimed that 

dealerships specializing in RV, marine, 

motorcycles, and other recreational 

vehicles, including certain high-end 

recreational vehicles,143 should be 

excluded from coverage, generally 

contending that such dealerships 

operate differently from automobile 

dealerships, and that these types of 

vehicles are used for different purposes 

than are automobiles. As explained in 

the section-by-section analysis of the 

definition of ‘‘Covered Motor Vehicle’’ 

in SBP III.B.2(e), after considering 

stakeholder comments, the Commission 


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608 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

144The Oxford Advanced American Dictionary 

defines ‘‘servicing’’ as ‘‘the act of checking and 

repairing a vehicle, machine, etc. to keep it in good 

condition’’; see also 15 U.S.C. 5519(b)(3) (referring 

to ‘‘the sale, financing, leasing, rental, repair, 

refurbishment, maintenance, or other servicing of 

motor vehicles, motor vehicle parts, or any related 

or ancillary product or service’’). 

145Used Motor Vehicle Trade Regulation Rule 

(‘‘Used Car Rule’’), 81 FR 81664, 81667 (Nov. 18, 

2016). 

146See 12 U.S.C. 5519(a), (f). 

147Section 1029(d) of the Dodd-Frank Act defines 

‘‘motor vehicle dealer’’ as ‘‘any person or resident 

in the United States, or any territory of the United 

States, who—(A) is licensed by a State, a territory 

of the United States, or the District of Columbia to 

engage in the sale of motor vehicles; and (b) takes 

title to, holds an ownership in, or takes physical 

custody of motor vehicles.’’ 15 U.S.C. 5519(f)(2). 

Parts (A) and (B) of this definition are identical 

to parts (1) and (2) of the definition of ‘‘ ‘Covered 

Motor Vehicle Dealer’ or ‘Dealer’ ’’ in the Final 

Rule. 

Section 1029(d) of the Dodd-Frank Act states that 

the Commission ‘‘is authorized to prescribe rules 

under sections 5 and 18(a)(1)(B) of the Federal 

Trade Commission Act in accordance with section 

553 of title 5, United States Code, with respect to 

a person described in subsection (a).’’ 15 U.S.C. 

5519(d). Section 1029(a) in turn, provides the CFPB 

‘‘may not exercise any rulemaking, supervisory, 

enforcement or any other authority . . . over a 

motor vehicle dealer that is predominantly engaged 

in the sale and servicing of motor vehicles, the 

leasing and servicing of motor vehicles, or both.’’ 

15 U.S.C. 5519(a). The last clause is identical to part 

(3) of the definition in the Final Rule. 

Several commenters requested that the 

Commission allow consumers to buy vehicles 

directly from manufacturers. Nothing in the Rule 

prohibits consumers from doing so. 

148See, e.g., Person, Black’s Law Dictionary (11th 

ed. 2019) (defining ‘‘person’’ to include ‘‘[a] human 

being’’ and ‘‘[a]n entity (such as a corporation) that 

is recognized by law as having most of the rights 

and duties of a human being.’’); Person, MerriamWebster.com Dictionary, https://www.merriamwebster.com/dictionary/person (last visited Dec. 5, 

2023) (defining ‘‘person’’ to include ‘‘human’’ and 

‘‘one (such as a human being, a partnership, or a 

corporation) that is recognized by law as the subject 

of rights and duties’’); see also 12 U.S.C. 5481(19) 

(Dodd-Frank Act statutory authority for the Final 

Rule defining ‘‘person’’ as ‘‘an individual, 

partnership, company, corporation, association 

(incorporated or unincorporated), trust, estate, 

cooperative organization, or other entity’’); 1 U.S.C. 

1 (Dictionary Act defining ‘‘person’’ to include 

‘‘corporations, companies, associations, firms, 

partnerships, societies, and joint stock companies, 

as well as individuals’’). The application of covered 

motor vehicle dealer and dealer to entities also is 

consistent with these terms’ use in the NPRM and 

commenter understanding of these terms in the 

course of public comment. 

is removing marine, motorcycle, RV, 

and certain other vehicles from the 

definition in § 463.2(e), and to reflect 

this change, finalizing the defined term 

as ‘‘ ‘Covered Motor Vehicle’ or 

‘Vehicle,’ ’’ thereby excluding from the 

Final Rule entities who otherwise 

would have qualified as ‘‘Dealers’’ 

solely based on their sale and servicing, 

or leasing and servicing, of such 

vehicles. The Commission underscores 

that, regardless of the definition of 

‘‘Covered Motor Vehicle’’ under the 

Final Rule, unfair and deceptive 

practices remain unlawful under the 

FTC Act. The Commission will continue 

to monitor all vehicle markets to 

determine whether additional action is 

warranted to protect consumers. 

Some dealership association 

commenters argued that, under the 

Commission’s proposal, this definition 

exempted dealers subject to the 

jurisdiction of the CFPB. Other such 

commenters similarly contended that, 

under the proposal, used car dealers 

that do not engage in extensive post-sale 

repairs do not ‘‘service’’ vehicles or that 

do not have separate service 

departments may have been excluded 

from coverage, contending further that 

excluding such dealers would put other 

dealers at a competitive disadvantage. 

Contrary to these commenters’ 

assertions, the definition does not 

contain such exclusions. By its plain 

terms, the definition applies to dealers 

that meet its three enumerated 

components. Nowhere does the 

definition limit coverage of dealers 

based on CFPB jurisdictional 

considerations. Likewise, the definition 

does not condition coverage on whether 

a dealership has a service department or 

include any other requirement or 

limitation beyond those enumerated in 

§ 463.2(f). By its plain meaning, the term 

‘‘servicing’’ covers, for instance, 

‘‘checking and repairing a vehicle, 

machine, etc. to keep it in good 

condition.’’ 144 As the Commission has 

previously stated, the term ‘‘servicing’’ 

‘‘captures activities undertaken by 

essentially all used car dealers.’’ 145

Thus, the definition does not place 

dealers with separate servicing 

departments at a competitive 

disadvantage, and the Commission need 

not remove the term ‘‘servicing of motor 

vehicles’’ from the Final Rule. 

One such commenter further 

contended that the proposed definition 

did not cover certain entities, including 

certain direct sellers or manufacturers or 

others not licensed in a particular State, 

or lenders who offer add-on products 

such as GAP agreements and debt 

suspension products. As previously 

discussed, the Final Rule applies to all 

dealers that meet the three parts of this 

definition.146 To the extent that the 

definition does not apply to specific 

entities, this reflects the scope and 

bounds of the rulemaking authority 

Congress delegated to the Commission 

under the Dodd-Frank Act.147

Finally, some industry and dealership 

association commenters posited that the 

proposal conflicted with Federal and 

State law or duplicated the regulatory 

authority of State enforcement agencies. 

These commenters did not provide 

information regarding how duplicative 

laws prohibiting misrepresentations, 

requiring disclosures, or prohibiting 

charges for items that would not benefit 

the consumer or for items without 

express, informed consent would create 

harmful consequences, and the 

Commission is not aware of any laws 

that allow such conduct by those that 

the Rule defines as ‘‘Covered Motor 

Vehicle Dealer[s].’’ Moreover, the Final 

Rule provides additional remedies that 

will benefit consumers who encounter 

conduct that is already illegal under 

State or Federal law, including by 

adding a mechanism for the 

Commission to redress consumers 

injured by a dealer’s violation of the 

Rule, and will assist law-abiding dealers 

that presently lose business to 

competitors that act unlawfully. To the 

extent the Rule may overlap with State 

law, dealers can comply with these laws 

and also with the requirements that 

follow from the operation, in the Rule, 

of the Commission’s definition. To the 

extent there is truly an inconsistency 

between the provisions of the Final Rule 

and a State law, § 463.9 sets out the 

Rule’s relation to State laws. 

Thus, after careful consideration of 

the comments, the Commission is 

finalizing the definition of ‘‘ ‘Covered 

Motor Vehicle Dealer’ or ‘Dealer’ ’’ with 

modifications for clarity. The definition 

in the Final Rule incorporates the 

phrase ‘‘including any individual or 

entity’’ to confirm that the term 

‘‘person,’’ like all undefined terms in 

this part, is used according to its 

ordinary meaning and includes 

individuals and corporate entities and 

adds the word ‘‘Covered’’ to the 

definition to reflect the narrowed scope 

of ‘‘Covered Motor Vehicle.’’ 148

(g) Express, Informed Consent 

The proposed rule defined the term 

‘‘Express, Informed Consent’’ as ‘‘an 

affirmative act communicating 

unambiguous assent to be charged, 

made after receiving and in close 

proximity to a Clear and Conspicuous 

disclosure, in writing, and also orally 

for in-person transactions’’ of ‘‘(1) What 

the charge is for’’ and ‘‘(2) The amount 

of the charge, including, if the charge is 

for a product or service, all fees and 

costs to be charged to the consumer over 

the period of repayment with and 

without the product or service.’’ The 

proposed rule also included in this 

definition three examples of what does 

not constitute express, informed 

consent: ‘‘(i) A signed or initialed 

document, by itself; (ii) Prechecked 


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Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 609 

149Comment of Ga. Auto. Dealers Ass’n, Doc. No. 

FTC–2022–0046–10806 at 4. 

150See FTC Policy Statement on Deception, supra 

note 42, at 1–2, 5; see also Fed. Trade Comm’n v. 

Fleetcor Techs., Inc., 620 F. Supp. 3d 1268, 1303 

(N.D. Ga. 2022); Fed. Trade Comm’n v. Crescent 

Pub. Grp., Inc., 129 F. Supp. 2d 311, 321 (S.D.N.Y. 

2001); Thompson Med. Co., Inc., 104 F.T.C. 648, 

816 (1984). 

151Some commenters, including certain industry 

associations, requested that the Rule include 

additional definitions, including for the terms 

‘‘charged,’’ ‘‘item,’’ ‘‘discount,’’ ‘‘rebate,’’ ‘‘trade-in 

value,’’ and ‘‘online service.’’ In response, the 

Commission notes that for terms not defined in the 

Rule, the plain meaning of the terms apply. 

boxes; or (iii) An agreement obtained 

through any practice designed or 

manipulated with the substantial effect 

of subverting or impairing user 

autonomy, decision-making, or choice.’’ 

In both the NPRM and in the provisions 

the Commission is finalizing, this 

definition is used exclusively in 

§ 463.5(c). As such, comments regarding 

the definition are examined in the 

discussion of that provision in SBP 

III.E.2(c). As stated therein, the 

Commission is finalizing this definition 

substantively as proposed. 

(h) GAP Agreement 

The proposed rule defined the term 

‘‘GAP Agreement’’ as ‘‘an agreement to 

indemnify a vehicle purchaser or lessee 

for any of the difference between the 

actual cash value of the insured’s 

vehicle in the event of an unrecovered 

theft or total loss and the amount owed 

on the vehicle pursuant to the terms of 

a loan, lease agreement, or installment 

sales contract used to purchase or lease 

the vehicle, or to waive the unpaid 

difference between money received 

from the purchaser’s or lessee’s motor 

vehicle insurer and some or all of the 

amount owed on the vehicle at the time 

of the unrecovered theft or total loss.’’ 

The proposed definition also noted that 

this included ‘‘products or services 

otherwise titled ‘Guaranteed 

Automobile Protection Agreement,’ 

‘Guaranteed Asset Protection 

Agreement,’ ‘GAP insurance,’ or ‘GAP 

Waiver[ ].’ ’’ This term appeared in two 

sections of the rule proposal: in the 

provision regarding dealer charges for 

add-ons from which the consumer 

would not benefit at proposed 

§ 463.5(a), and in the recordkeeping 

provision at proposed § 463.6(a)(4). 

Comments regarding the proposed 

definition are examined in the 

discussion of § 463.5(a) in SBP III.E.2(a). 

As stated therein, the Commission is 

finalizing this definition substantively 

as proposed, with typographical 

modifications to correct a misplaced 

period in the original proposal and a 

modification removing the extraneous 

term ‘‘insured’s’’ from the phrase 

‘‘actual cash value of the insured’s 

Vehicle.’’ In addition, the Final Rule 

capitalizes the defined term ‘‘Vehicle’’ 

to conform with the revised definition 

of ‘‘ ‘Covered Motor Vehicle’ or 

‘Vehicle’ ’’ at § 463.2(e). 

(i) Government Charges 

The proposed rule defined 

‘‘Government Charges’’ as ‘‘all fees or 

charges imposed by a Federal, State or 

local government agency, unit, or 

department, including taxes, license and 

registration costs, inspection or 

certification costs, and any other such 

fees or charges.’’ This term appeared in 

two provisions of the rule proposal: in 

the proposed definition of ‘‘Offering 

Price’’ at § 463.2(k), which pertains to 

the proposed offering price disclosure 

provision at § 463.4(a); as well as in the 

proposed provision relating to 

undisclosed or unselected Add-ons at 

§ 463.5(b). As explained in further detail 

in the paragraph-by paragraph analysis 

of § 463.5(b) in SBP III.E.2(b), the 

Commission has determined not to 

finalize § 463.5(b), and as such will 

refrain from examining this proposed 

definition in relation to that provision. 

Comments regarding the proposed 

definition are examined in the 

discussion of § 463.4(a) in SBP III.D.2(a). 

As stated therein, the Commission is 

finalizing this definition substantively 

as proposed, with a typographical 

modification to include a serial comma 

for consistency. 

(j) Material or Materially 

The proposed rule defined ‘‘Material’’ 

or ‘‘Materially’’ as ‘‘likely to affect a 

person’s choice of, or conduct regarding, 

goods or services.’’ This term appeared 

in the prohibited misrepresentations 

provisions at § 463.3(b) and (g), and in 

the recordkeeping provision at 

§ 463.6(a). As described in detail in the 

section-by-section analysis of § 463.3 in 

SBP III.C, the Final Rule modifies the 

introductory paragraph of § 463.3 from 

the Commission’s original proposal to 

add the word ‘‘Material,’’ such that the 

Commission’s materiality standard 

applies to all subparts of § 463.3. The 

Final Rule accordingly removes the 

word ‘‘Material’’ from § 463.3(b) and (g) 

so as to avoid duplication. Based on the 

following, the Commission is finalizing 

this definition, now at § 463.2(j), 

substantively as proposed. 

A dealership association commenter 

noted that the proposed definition did 

not use the term ‘‘significance,’’ and 

asserted that ‘‘Material’’ information 

should be significant and not ‘‘rooted in 

personal preference.’’ 149 The 

Commission notes that this definition 

adopts the meaning of the term as 

articulated through decades of 

enforcement actions 150 instead of using 

a different term such as ‘‘significance,’’ 

and does not use the term ‘‘personal 

preference’’ or rely on ‘‘personal 

preference’’ any more than the phrase 

‘‘likely to affect’’ or ‘‘significant’’ does. 

Thus, the Commission is finalizing this 

definition substantively as proposed. 

(k) Offering Price 

The proposed rule defined ‘‘Offering 

Price’’ as ‘‘the full cash price for which 

a Dealer will sell or finance the motor 

vehicle to any consumer, excluding only 

required Government Charges.’’ This 

term appeared in two provisions of the 

rule proposal: in the proposed offering 

price disclosure provision at § 463.4(a), 

as well as in the proposed provision 

relating to undisclosed or unselected 

add-ons at § 463.5(b). As explained in 

further detail in the paragraph-byparagraph analysis of § 463.5(b) in SBP 

III.E.2(b), the Commission has 

determined not to finalize § 463.5(b), 

and as such, will refrain from examining 

this proposed definition in relation to 

that provision. Comments regarding the 

proposed definition are examined in the 

discussion of § 463.4(a) in SBP 

III.D.2(a).151 As stated therein, the 

Commission is finalizing this definition 

largely as proposed, with a modification 

to clarify that dealers may, but need not, 

exclude required government charges 

from a motor vehicle’s offering price. In 

addition, the definition in the Final 

Rule substitutes ‘‘Vehicle’’ for ‘‘motor 

vehicle’’ to clarify that the term 

conforms with the revised definition of 

‘‘ ‘Covered Motor Vehicle’ or ‘Vehicle’ ’’ 

at § 463.2(e). 

C. § 463.3: Prohibited 

Misrepresentations 

1. General Comments 

The proposed rule set forth 

prohibitions against certain 

misrepresentations by motor vehicle 

dealers. Based on the following, the 

Commission has determined to finalize 

these prohibitions, with minor 

revisions. 

The following paragraphs discuss 

comments relating to § 463.3 generally 

and Commission responses to such 

comments, followed by comments 

relating to each paragraph of § 463.3 and 

Commission responses to such 

comments. 

The NPRM proposed prohibiting 

dealers from making any 

misrepresentation, expressly or by 

implication, regarding specific listed 

categories. The Commission received 

many comments regarding this 


khammond on DSKJM1Z7X2PROD with RULES2
610 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

152See Motor Vehicle Dealers Trade Regulation 

Rule, Comment Docket, https://

www.regulations.gov/document/FTC-2022-0046- 

0001/comment. 

153 Individual commenter, Doc. No. FTC–2022– 

0046–0036. 

154 Individual commenter, Doc. No. FTC–2022– 

0046–0099. 

155 Individual commenter, Doc. No. FTC–2022– 

0046–0906. 

156 Individual commenter, Doc. No. FTC–2022– 

0046–1878. 

157 Individual commenter, Doc. No. FTC–2022– 

0046–3686. 

158 Individual commenter, Doc. No. FTC–2022– 

0046–4752. 

159 Individual commenter, Doc. No. FTC–2022– 

0046–5580. 

160 Individual commenter, Doc. No. FTC–2022– 

0046–2378. 

161 Individual commenter, Doc. No. FTC–2022– 

0046–3693. 

162 Individual commenter, Doc. No. FTC–2022– 

0046–4959. 

163 Individual commenter, Doc. No. FTC–2022– 

0046–0017. 

164 Individual commenter, Doc. No. FTC–2022– 

0046–0034. 

165 Individual commenter, Doc. No. FTC–2022– 

0046–0005. 

166 Individual commenter, Doc. No. FTC–2022– 

0046–1935. 

proposal, including comments 

supporting such a provision, comments 

urging the Commission to broaden the 

provision, and comments urging the 

Commission to limit or forgo the 

provision. 

Thousands of commenters expressed 

support for the proposed rule.152 Many 

of these commenters specifically 

expressed concern about misleading 

advertisements and deceptive pricing. 

Many individual commenters cited 

examples of such conduct from their 

own experiences purchasing or leasing 

vehicles, and many commenters with 

experience operating or working for a 

dealership shared their observations or 

experiences. For example: 

• I have been looking for a car at 

MSRP and most dealers[’] websites will 

list it at that price. [T]hen when you 

drive there the[y] will say well there is 

a market adjustment from 5,000 to 

20,000 dollars. [N]ow . . . you need a 

car and have wasted 3–4 hours and 

picked out what you thought was your 

next car.153

• I am currently in discussions with 

two dealerships for a new car. Both 

assure me there is absolutely no dealer 

markup, come to find out they are 

adding 3/5k of ‘‘mandatory’’ add-ons 

respectively once I get in the door.154

• The last vehicle I purchased 2 years 

ago was a nightmare. Drove 5 hrs[.] to 

a dealer in Southern California. I called 

the dealer and confirmed the price on 

their website was what I was going to 

pay. When I arrived there, they had a 

list of $2500 [i]n additional charges that 

were not disclosed when I called and 

before I started driving. Purchasing a 

vehicle shouldn’t be such a stressful 

process.155

• Most recently I started looking 

myself for a new lease, and looked at the 

RAV 4 prime. Went to my local dealer 

after seeing an ad on their site for $450 

a month. Not only did they not honor 

the deal, but wouldn’t even discuss that 

it was on their own site. I was told the 

SE model was [$5000] over MSRP and 

the XSE was [$8000] over.156

• I have contacted 10 different car 

dealerships in the past month looking to 

purchase a new or used SUV. 9 out of 

the 10 dealerships I contacted online or 

visited in-person in California changed 

or lied about the online advertised price 

of the vehicle I was inquiring about or 

said the car was sold or not available 

and tried to sell me a more expensive 

vehicle.157

• Once I was led to the F&I office I 

was told that I HAD to buy a $995 paint 

protection product that I didn[’]t want 

or need. I asked to see the contract for 

this product which clearly stated in 

bold letters ‘ACCEPTANCE OF THIS 

CONTRACT IS VOLUNTARY AND 

DOES NOT AFFECT THE FINANCING 

OF THE VEHICLE’ I pointed this out to 

the salesman and told him that I didn’t 

want this product[.] [H]e looked me in 

the eyes with my wife present and said 

‘‘You have to buy it[.]’’ 158

• At the dealership, the salesman 

offered a price of $38,000, over $8,000 

more than the advertised price. When I 

challenged the extra cost, he said the 

advertisement included every possible 

rebate and discount and no one could 

receive them together (some were 

exclusionary with other discounts).159

• While there are good honorable 

dealerships, far too many play games. 

Rarely is the price of [a] car advertised 

online or via mail EVER the actual 

price. Far too often in the F&I office the 

finance manager tries to [gloss] over 

add[-]ons that they just arbitrarily added 

on without telling you OR state I cannot 

get your loan approved without an 

extended warranty as an example I 

experienced. . . . I worked for a Toyota 

dealership many years ago and left the 

industry because it made me sick seeing 

the games played taking advantage of 

people. Change is needed and sooner 

than later.160

• I work as a salesperson at a local 

Nissan dealership. . . . Currently, 

dealerships across the US, including the 

one I work for, have made the car 

buying process needlessly confusing, 

expensive, and frustrating by engaging 

in false advertising and hidden add-on 

products. While these practices are very 

unscrupulous, they are incredibly 

effective at what they are designed to 

do: drive revenue for the store. If these 

regulations are passed, they would 

certainly take a significant toll on my 

personal finances. But the longer I work 

in my position, the more I realize that 

no one should be allowed to engage in 

such exploitative conduct in the course 

of running a business.161

• I am in the auto industry and work 

at a very transparent and honest 

dealership. I think most of these rules 

are great. I hear horror stories about 

honest people seeing a car advertised for 

one price, only to be told there are 

additional a[d]d-ons and markups once 

they arrive. I think this is unfair. I’m 

also shocked every time I hear about a 

dealership charging for mandatory 

window etching and nitrogen filled 

tires. I even know of reputable 

dealerships that add GPS tracking and 

theft recovery devices to every new car, 

even though these cars come with GPS 

theft recovery from the manufacturer. 

Stopping these practices will help 

restore consumers’ faith in car 

dealerships, save them money, and lead 

to a more honest and ethical 

industry....162

Other commenters expressed support 

for transparent pricing generally, 

stating, for example: 

• A consumer should be able to see 

a price, walk into a dealership, and pay 

that price. Plain and simple, just like 

ANY OTHER RETAILER.’’ 163

• If I walk into Best Buy and see a 

price they HAVE to sell it to me for that 

price or cheaper. These rules are long 

over due.164

• I believe if they advertise a car, it 

should be available for sale—at the 

advertised price—just as a supermarket 

can’t advertise a price for something 

they don’t have, or add a ‘coupon 

redemption fee’ to it. I believe these 

rules are an extremely reasonable 

approach to a long-standing problem 

and urge you to adopt them.165

• I used to work in the retail auto 

industry and these proposed rules will 

help everyone (including the dealers 

who are fighting them). Consumers will 

benefit from the transaction 

transparency, and over the long term 

even the shady dealers will benefit by 

treating consumers fairly and 

developing long term relations.166

• These regulations would be the best 

thing to happen for consumer protection 

since the Mo[n]roney Label. I not only 

have had to navigate and negotiate 

erroneous fees at dealers, but I’ve also 


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167 Individual commenter, Doc. No. FTC–2022– 

0046–10441. 

168See, e.g., Complaint, CarMax, Inc., No. C–4605 

(F.T.C. Mar. 22, 2017) (alleging Defendants misled 

consumers by representing that the used motor 

vehicles Defendants sold had been subject to 

rigorous inspection but omitting important safety 

information about recalls); Complaint, West-Herr 

Auto. Grp., Inc., No. C–4607 (F.T.C. Mar. 22, 2017) 

(alleging Defendants failed to disclose, or disclose 

adequately, that used motor vehicles it sold were 

subject to open recalls for safety issues); Complaint, 

Asbury Auto. Grp., Inc., No. C–4606 (F.T.C. Mar. 22, 

2017) (alleging deceptive failure to disclose material 

information about the safety of used motor vehicles 

sold by Defendants); Complaint ¶¶ 20–24, Fed. 

Trade Comm’n v. Passport Imports, Inc., No. 8:18– 

cv–03118 (D. Md. Oct. 10, 2018) (alleging 

Defendants misled consumers by mailing ‘‘Urgent 

Recall’’ notices that were similar to and had the 

same color scheme as notices manufacturers are 

required by the U.S. Department of Transportation’s 

NHTSA to use when sending information about 

vehicle recalls, even though in the ‘‘vast majority 

of instances’’ the recipients’ cars were not subject 

to an open recall). 

169One commenter expressed concern that the 

prohibited misrepresentations would cause 

dealerships to provide less information, because 

discussing pricing and quotes would result in 

providing further documentation for every 

conversation. However, as the FTC Act already 

prohibits misrepresentations, and given that pricing 

and financing information are among the most 

salient aspects of a consumer’s shopping for a 

vehicle, the Commission considers it unlikely that 

§ 463.3 would result in less information or the 

creation of additional documentation. 

170Under section 19(a)(1) of the FTC Act, the 

Commission may sue in Federal district court ‘‘any 

person, partnership, or corporation’’ that ‘‘violates 

any rule under [the FTC Act] respecting unfair or 

deceptive acts or practices.’’ 15 U.S.C. 57b(a)(1). 

Where such liability is found, under section 19(b) 

a court may ‘‘grant such relief as [it] finds necessary 

to redress injury . . . resulting from the rule 

violation,’’ including the ‘‘rescission or reformation 

of contracts, the refund of money or return of 

property, [or] the payment of damages.’’ Id. 57b(b). 

A few commenters requested that the Rule go 

further in providing remedies, including by 

allowing for a private right of action to enforce Rule 

violations. The Commission notes that, depending 

on State law, consumers may be able to use State 

statutes that prohibit unfair or deceptive practices 

to challenge conduct that violates this Rule. 

There is nothing in the FTC Act or this Rule that 

would preclude consumers from exercising any 

such legal rights under State law. The Commission 

will continue to monitor the market to determine 

whether additional steps are needed. 

171See NPRM at 42045 (proposed § 463.3(b), (g)). 

172NPRM at 42019. 

173FTC Policy Statement on Deception, supra 

note 42, at 5 & nn.47–55. 

worked at dealers whose transparency 

and forthrightness put them at a 

disadvantage. Many dealers advertise 

vehicles that can not [sic] be purchased 

or leased at the advertised price due to 

deceptive adverts either not disclosed or 

in a print so fine it can’t be read. Please 

pass this ruling. My grandma shouldn’t 

have to pay more than someone else just 

because she’s not a good negotiator.167

Consumer advocacy organization 

commenters and individual commenters 

urged the FTC to include additional 

specific provisions in § 463.3, including 

a prohibition against misrepresentations 

regarding the safety, mechanical or 

structural condition, odometer reading, 

or history of a vehicle. Similarly, 

commenters including a municipal 

regulator urged the Commission to 

specifically prohibit misrepresentations 

regarding certification of used vehicles, 

citing enforcement actions it brought 

against dealers that misrepresented used 

vehicles as ‘‘certified pre-owned’’ or 

‘‘manufacturer certified.’’ The FTC takes 

seriously deception relating to the safety 

or condition of a vehicle and the 

practice of charging consumers more 

based on false claims or reassurances.168

Depending on the claim made by the 

dealership and the specific facts at 

issue, deceptive conduct in either of 

these areas may be covered by the 

enumerated misrepresentation 

paragraphs the Commission is 

finalizing, such as by § 463.3(a) if it 

relates to the terms of the purchase, 

lease, or financing. The FTC will 

continue to monitor dealer 

misrepresentations to determine 

whether additional action is needed. 

In addition, a number of credit union 

commenters requested that the 

Commission explicitly address 

misrepresentations involving dealers’ 

refusal to accept outside financing to 

purchase a vehicle. These commenters 

cited several examples of consumers 

being told that they could not use 

outside financing, that they would not 

receive a lower interest rate from an 

outside financial institution, or that a 

particular interest rate was the best rate 

the consumer can get. The Rule already 

covers such conduct. For example, 

§ 463.3(a) of the Rule, which prohibits 

dealers from misrepresenting the cost or 

terms of financing a vehicle, covers 

these and other misrepresentations 

regarding financing, including the 

availability of outside or ‘‘indirect’’ 

financing terms, or the costs of such 

financing as compared to those of any 

dealer-provided financing. 

Two individual commenters posited 

that any language prohibiting 

misrepresentations should explicitly 

include the word ‘‘omissions,’’ in order 

to ensure that dealers do not sneak in 

additional costs without consumers’ 

consent or understanding. The 

Commission appreciates this concern, 

and notes that the Rule has many 

provisions prohibiting such misconduct, 

including the required disclosures 

regarding price, add-ons, and total 

amount of payments in § 463.4 of the 

Final Rule, as well as the requirement 

in § 463.5(c) to obtain consumers’ 

express, informed consent before 

charging for any items. 

Other commenters, including 

dealership associations, individual 

commenters, and a United States 

Representative, questioned whether 

certain of the proposed 

misrepresentation provisions were 

duplicative of other laws, such as the 

Truth in Lending Act (‘‘TILA’’), the 

Consumer Leasing Act (‘‘CLA’’), or State 

regulations, and in some instances 

whether compliance with State 

regulations should act as a safe harbor. 

The Commission notes that another 

statute—the FTC Act—already prohibits 

misrepresentations in or affecting 

commerce, and to the extent there is 

duplication between the FTC Act and 

other existing statutes pertaining to 

deception, there is no evidence that 

duplicative misrepresentation 

prohibitions have harmed consumers or 

competition.169 The Commission further 

notes that the Final Rule provides 

additional remedies that will benefit 

consumers who encounter conduct that 

is otherwise already illegal under 

Federal law, and will aid law-abiding 

dealers that lose business to competitors 

that act unlawfully.170 State laws may 

provide more or less specific 

requirements as long as those 

requirements are not inconsistent with 

part 463, as set forth in § 463.9, and in 

the event of an inconsistency, the Rule 

only affects such State law to the extent 

of the inconsistency. Because dealers 

are already prohibited from engaging in 

‘‘deceptive acts or practices’’ under the 

FTC Act, dealers should be able to 

comply with these provisions without 

the need for a safe harbor. 

Industry association commenters also 

claimed that the prohibited 

misrepresentation proposal ignored the 

materiality prong of the Commission’s 

deception standard, and further 

observed that some of the prohibited 

misrepresentations in the proposed rule 

explicitly included a materiality 

requirement,171 while others did not. As 

the NPRM made clear, the 

Commission’s proposed 

misrepresentation section, at § 463.3, 

addressed misrepresentations that are 

all material.172 The Commission need 

not explicitly specify materiality in its 

description of these misrepresentations; 

indeed, the Commission has long 

considered certain categories of 

information, express claims, and 

intended implied claims to be 

presumptively material.173

Nevertheless, rather than using the term 

‘‘Material’’ in certain individual 

enumerated paragraphs, the 

Commission has determined to modify 

the introductory text of § 463.3 from the 

Commission’s original proposal in order 


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174The Final Rule prohibits misrepresentations in 

specific categories. In contrast, some FTC rules go 

further by prohibiting misrepresentations of ‘‘any 

material aspect’’ of the transaction. See, e.g., 

Mortgage Assistance Relief Services Rule, 16 CFR 

322.3(b); Telemarketing Sales Rule, 16 CFR 

310.3(a)(2)(x). 

175FTC Policy Statement on Deception, supra 

note 42, at 2 (citing Am. Home Prods., 98 F.T.C. 

136, 374 (1981), aff’d, 695 F.2d 681, 687 (3d Cir. 

1982) (evaluation of the entire document); Warner 

Lambert, 86 F.T.C. 1398, 1489–90 (1975), aff’d 562 

F.2d 749 (D.C. Cir. 1977), cert. denied, 435 U.S. 950 

(1978) (juxtaposition of phrases); Firestone Tire & 

Rubber Co., 81 F.T.C. 398, 456 (1972), aff’d, 481 

F.2d 246 (6th Cir.), cert. denied, 414 U.S. 1112 

(1973) (nature of the claim); see also Kraft, Inc. v. 

Fed. Trade Comm’n, 970 F.2d 311, 319 (7th Cir. 

1992) (‘‘Commission may rely on its own reasoned 

analysis to determine what claims, including 

implied ones, are conveyed in a challenged 

advertisement, so long as those claims are 

reasonably clear from the face of the 

advertisement.’’). 

176FTC Policy Statement on Deception, supra 

note 42, at 2 n.8. 

177The interpretation or reaction does not have to 

be the only one; when a seller’s representation 

conveys more than one meaning to reasonable 

consumers, one of which is false, the seller is liable 

for the misleading interpretation. See FTC Policy 

Statement on Deception, supra note 42, at 3. 

Further, an interpretation will be presumed 

reasonable if it is the one the respondent intended 

to convey. Id. 

178The FTC’s Policy Statement on Deception and 

scores of FTC cases make clear that both express 

and implied claims can be deceptive. See, e.g., ECM 

Biofilms, Inc. v. Fed. Trade Comm’n, 851 F.3d 599 

(6th Cir. 2017) (affirming Commission’s finding that 

an additive manufacturer’s unqualified 

biodegradability claim conveyed an implied claim 

that its plastic would completely biodegrade within 

five years); POM Wonderful LLC, No. C–9344 

(F.T.C. Jan. 10, 2013) (Opinion of the Commission), 

aff’d as modified, POM Wonderful, LLC v. Fed. 

Trade Comm’n, 777 F.3d 478 (D.C. Cir. 2015) 

(finding that company’s advertisements would 

reasonably be interpreted by consumers to contain 

an implied claim that POM products treat, prevent, 

or reduce the risk of certain health conditions and 

for some ads that these effects were clinically 

proven); Kraft, Inc. v. Fed. Trade Comm’n, 970 F.2d 

311 (7th Cir. 1992) (affirming finding of deception 

where Kraft ads juxtaposed references to the milk 

contained in Kraft singles and the calcium content 

of the milk, the combination of which implied that 

each Kraft single contained the same amount of 

calcium as five ounces of milk). 

179FTC Policy Statement on Deception, supra 

note 42, at 2; Int’l Harvester Co., 104 F.T.C. 949, 

1057–58 (1984). 

180See Fed. Trade Comm’n v. Freecom 

Commc’ns, 401 F.3d 1192, 1202 (10th Cir. 2005) 

(‘‘Because the primary purpose of § 5 is to protect 

the consumer public rather than punish the 

wrongdoer, the intent to deceive the consumer is 

not an element of a § 5 violation.’’). 

181See Fed. Trade Comm’n v. Figgie Int’l, Inc., 

994 F.2d 595, 605–06 (9th Cir. 1993) (holding that 

section 19 of the FTC Act does not require proof 

of individual consumer reliance; rather, there is a 

‘‘presumption of actual reliance’’ that arises once 

the Commission has proved that a defendant made 

material misrepresentations, that they were widely 

disseminated, and that consumers purchased the 

defendant’s product). 

to specifically prohibit 

misrepresentations regarding material 

information about the enumerated 

paragraphs. As such, the Commission is 

also removing what would otherwise be 

redundant references to the term 

‘‘Material’’ within paragraphs (b) and (g) 

of § 463.3. 

A national dealership association 

incorrectly asserted that this section is 

problematic because there is no 

requirement that the representation or 

omission be material or be viewed from 

the perspective of a consumer acting 

reasonably under the circumstances. As 

adopted in the final rule, this section 

adds the term ‘‘Material,’’ stating that it 

is an unfair or deceptive practice for any 

motor vehicle dealer to make any 

misrepresentation, expressly or by 

implication, regarding material 

information about the specific categories 

enumerated in § 463.3.174 The 

Commission is not aware of situations 

where dealers have made 

misrepresentations expressly or by 

implication regarding material 

information about these specific 

categories that are not deceptive or 

unfair, nor did commenters describe any 

such situations. 

The Commission further notes that, by 

the terms of this section, a court must 

find that the dealer made an express or 

implied misrepresentation regarding 

material information for § 463.3 to be 

violated. For an express or implied 

misrepresentation regarding material 

information to be made in violation of 

the FTC Act and this Rule, there must 

be a representation that misleads 

consumers acting reasonably under the 

circumstances regarding material 

information. Whether such a 

representation has occurred depends on 

the facts. In the case of implied 

representations, whether a 

representation has occurred is often 

evident from an examination of the 

representation itself, including, for 

example, an evaluation of the document 

in which a representation is made, the 

juxtaposition of language in that 

document, the nature of the 

representation, and the nature of the 

transaction.175 In other situations, 

extrinsic evidence that it is reasonable 

for consumers to reach the implied 

representation may be helpful, such as 

consumer testimony, surveys, or other 

reliable evidence of consumer 

interpretation.176

For example, if a dealer offers 

discounted coffee for customers who 

visit its dealership before 10 a.m. and 

honors that offer, but makes no 

representations, expressly or by 

implication, about discounted cars, the 

dealer will not have violated § 463.3(d), 

which prohibits express or implied 

misrepresentations regarding rebates 

and discounts, even if a consumer holds 

an unreasonable belief that the offer was 

for discounted cars. On the other hand, 

if a dealership’s advertisement depicts a 

car with a consumer standing next to it 

holding a cup of coffee, and states, 

‘‘10% discount available before 10 

a.m.,’’ such an advertisement can 

convey several representations that may 

mislead reasonable consumers,177

including that the car is available at a 

10% discount. 

Commenters including industry 

associations opined on the term 

‘‘implied,’’ contending for example that 

the idea that a misrepresentation can be 

implied is overly broad, and a 

dealership association commenter 

expressed concern that the inclusion of 

‘‘implied’’ creates too much uncertainty. 

As has been recognized under the law 

for decades, however, representations 

can mislead consumers, even without 

making express claims.178 Take, for 

example, an advertisement that shows a 

picture of a new sedan for sale. Even if 

the advertisement does not expressly 

state that consumers could use the 

vehicle to drive at speeds higher than 25 

miles per hour, there is an implied 

representation that a product is fit for 

the purposes for which it is sold.179

Thus, limiting the Rule to prohibit only 

express misrepresentations would 

significantly hamper its usefulness to 

consumers. 

One industry association commenter 

further argued that the proposed rule 

created a new deception standard that 

ignored intent and reliance. This 

argument, however, misstates the law, 

which does not require intent 180 or 

reliance 181 to establish deception. 

Thus, the Commission is finalizing 

the introductory paragraph of § 463.3 

largely as proposed, with a modification 

stating that it applies to 

misrepresentations regarding material 

information. For consistency with other 

parts of the Rule, the Commission is 

also removing the shorthand ‘‘FTC Act’’ 

that appeared in parentheses after ‘‘the 

Federal Trade Commission Act’’ in the 

introductory paragraph of the proposed 

rule. For clarity and consistency with 

the revised definition of ‘‘Covered 

Motor Vehicle Dealer’’ (at § 463.2(f) and 

discussed in SBP III.B.2(f)), the 

Commission is adding the word 

‘‘Covered’’ to ‘‘Motor Vehicle Dealer’’ in 

the introductory paragraph. Finally, 

without changing any substantive 

requirements for covered entities, the 

Commission is adding the following 

sentence to the end of § 463.3, at newly 

designated paragraph (q): ‘‘The 

requirements in this section also are 

prescribed for the purpose of preventing 

the unfair or deceptive acts or practices 


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182Examples of ‘‘costs or terms of purchasing, 

financing, or leasing a vehicle’’ include, among 

other things, express or implied representations 

regarding a vehicle’s total cost, down payments, 

interest rates, repayment schedules, the price for 

added features, other charges, certainty or finality 

of terms, and the availability of discounts. The 

Commission has brought numerous enforcement 

actions where, for example, dealers have 

misrepresented the total price a consumer could 

pay for vehicles, or concealed a required down 

payment or other restrictions on the offer. See, e.g., 

Complaint ¶¶ 10–11, Fed. Trade Comm’n v. Liberty 

Chevrolet, Inc., No. 1:20–cv–03945 (S.D.N.Y. May 

21, 2020) (alleging false ads stating a certain price 

but charging consumers higher prices); Complaint 

¶¶ 38–46, Fed. Trade Comm’n v. Tate’s Auto Ctr. 

of Winslow, Inc., No. 3:18–cv–08176–DJH (D. Ariz. 

July 31, 2018) (alleging false ads touting attractive 

terms but concealing (i) ads were for lease offers 

only and required substantial initial payment, (ii) 

discounts were subject to material limitations, or 

(iii) other legally required disclosures); Complaint 

¶¶ 7–16, Cowboy AG, LLC, No. C–4639 (F.T.C. Jan. 

4, 2018) (alleging false ads touting attractive terms, 

but concealing substantial down payments, offers 

were for leases and not purchases, material 

eligibility restrictions, and other legally required 

disclosures). 

183Some commenters repeat this and similar 

questions, regarding what types of disclosures are 

required, through provision (o); the same response 

applies—provisions (a) through (o) do not 

affirmatively require particular disclosures. As with 

all misrepresentations prohibited by the Rule, and 

under section 5 of the FTC Act, misrepresentations 

are barred whether they are made expressly or by 

implication. 

184See Trade Regulation Rule Concerning 

Preservation of Consumers’ Claims and Defenses, 16 

CFR 433.2 [hereinafter Holder Rule]. 

185The National Automobile Dealers Association 

commissioned a survey, released in May of 2023, 

that asserted the Commission’s proposed rule 

would lead to an increase in consumer transaction 

time. Edgar Faler et al., Ctr. for Auto. Rsch., 

‘‘Assessment of Costs Associated with the 

Implementation of the Federal Trade Commission 

Notice of Proposed Rulemaking (RIN 2022—14214), 

CFR part 463’’ (2023), https://www.cargroup.org/ 

wp-content/uploads/2023/05/CAR-Report_CFRPart-463_Final_May-2023.pdf. This survey was 

released more than seven months after the closure 

of the comment period for the notice of proposed 

rulemaking on September 12, 2022, and is not part 

of this rulemaking record. These facts 

notwithstanding, the Commission observes that 

each respondent to this survey was presented with 

a leading statement at the beginning of the survey 

asserting, inter alia, that the proposed rule would 

impose ‘‘new duties [that] are expected to create 

additional monitoring, training, forms, and 

compliance review responsibilities as well as a 

modification of record keeping systems and 

coordination with outside IT and other vendors’’ 

and ‘‘increase the time of a motor vehicle 

transaction, inhibit online sales, limit price 

disclosures, and increase customer confusion and 

frustration.’’ Id. at 34, 36 (introductory instructions 

on the survey instrument sent to respondents). In 

addition, this survey did not explain its selection 

process or criteria for the 60 dealers it surveyed, nor 

why only 40 such dealerships provided fully 

completed survey responses. Moreover, the survey 

report attributed much of this estimated increase to 

proposed rule provisions that the Commission is 

not finalizing. 

defined in this part, including those in 

§§ 463.4 and 463.5.’’ 

The Commission examines each 

paragraph of § 463.3, including by 

examining related comments and 

Commission responses to those 

comments. The Commission then 

discusses the corresponding provisions 

of the Final Rule. 

2. Paragraph-by-Paragraph Analysis of 

§ 463.3 

(a) The Costs or Terms of Purchasing, 

Financing, or Leasing a Vehicle 

Proposed § 463.3(a) prohibited 

misrepresentations regarding the cost or 

terms of purchasing, financing, or 

leasing a vehicle. The Commission is 

finalizing this provision largely as 

proposed, with the minor modification 

of capitalizing the defined term 

‘‘Vehicle’’ to conform with the revised 

definition at § 463.2(e) (explained in 

SBP III.B.2(e)). As previously discussed, 

the addition of ‘‘material’’ to the 

introductory paragraph of § 463.3 will 

apply to this paragraph and to all 

paragraphs of § 463.3 that follow. 

A number of commenters expressed 

support for this proposed provision, 

contending, inter alia, that it would 

level the playing field for car buyers and 

address unfair and deceptive practices 

related to financing terms and 

conditions. 

The Commission received a number 

of industry association comments 

requesting that the Commission clarify 

the operation of proposed § 463.3(a), 

including for example, by clarifying 

whether it would require dealers to 

discuss all purchase, finance, or lease 

terms, or whether it would require 

dealers to read aloud all the terms of the 

buyer’s order and finance or lease 

agreement. Dealership association 

commenters expressed a related concern 

that this proposed provision lacked 

specific guidance on dealer compliance. 

To begin, misrepresentations 

regarding ‘‘costs or terms of purchasing, 

financing, or leasing a vehicle’’ refer to 

the ordinary plain meaning of the words 

used in the provision.182 Second, as the 

language in the introductory paragraph 

of § 463.3 makes clear, its paragraphs— 

including paragraph (a) of § 463.3— 

prohibit misrepresentations regarding 

material information. By its terms, this 

paragraph requires no particular 

affirmative disclosures, whether written 

or oral; rather, this paragraph obligates 

dealers to refrain from 

misrepresentations regarding material 

information about the costs or terms of 

purchasing, financing, or leasing a 

vehicle.183

The Commission received comments 

from industry associations requesting 

that the Final Rule provide a safe harbor 

from liability stemming from dealers’ 

violations of the Rule to vehicle credit 

contract assignees, who take or receive 

these contracts subject to all claims and 

defenses consumers could assert against 

the dealer under the Commission’s 

Trade Regulation Rule Concerning 

Preservation of Consumers’ Claims and 

Defenses, also known as the ‘‘Holder 

Rule.’’ 184 The Rule, however, does not 

create liability for these entities under 

the Holder Rule where it did not 

previously exist; the Rule addresses 

conduct that is unfair or deceptive 

under the FTC Act. When enacting the 

Holder Rule, the Commission did not 

include a safe harbor or exceptions 

involving any specific deceptive or 

unfair conduct, and the Commission 

declines to do so through this Rule. 

A comment from a motor vehicle 

industry association argued that this 

provision would likely be inapplicable, 

or less impactful, with regard to RV 

sales because the RV industry rarely 

offers leases, if at all, and because RV 

sales are usually not financed through 

RV manufacturer-controlled financing 

companies. To the extent that specific 

provisions do not apply to specific 

entities, such provisions do not impose 

any obligations upon those entities. 

Nevertheless, as explained in the 

analysis of the ‘‘Covered Motor Vehicle’’ 

definition, § 463.2(e), the Commission is 

excluding recreational vehicle dealers 

from the definition of ‘‘Covered Motor 

Vehicle.’’ 

After carefully considering the 

comments, the Commission is finalizing 

paragraph (a) of § 463.3 with the minor 

modification of capitalizing ‘‘Vehicle.’’ 

This provision prohibits 

misrepresentations regarding ‘‘[t]he 

costs or terms of purchasing, financing, 

or leasing a Vehicle.’’ 

Misrepresentations of the price, 

discounts, or other terms are likely to 

cause consumers to waste time pursuing 

unavailable or inapplicable offers and to 

spend more money on a vehicle rather 

than undergoing the hours-long process 

to begin the vehicle search and 

shopping process anew at another 

dealership. Prohibiting these 

misrepresentations will save consumers 

time and money and ensure that dealers 

compete on a level playing field.185

(b) Any Costs, Limitation, Benefit, or 

Any Other Aspect of an Add-On 

Product or Service 

Proposed § 463.3(b) prohibited 

misrepresentations concerning any 

costs, limitation, benefit, or any other 

material aspect of an add-on product or 

service. Section 463.3(b) of the Final 

Rule adopts this provision without 

substantive modification. As described 

in detail in SBP III.C.1, the Commission 


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186See FTC Policy Statement on Deception, supra 

note 42, at 2, 5; see also Fed. Trade Comm’n v. 

Crescent Publ’g Grp., Inc., 129 F. Supp. 2d 311, 321 

(S.D.N.Y. 2001). 

187E.g., Cost, Cambridge Dictionary, https://

dictionary.cambridge.org/us/dictionary/english/cost 

(‘‘Cost’’ is defined as ‘‘the amount of money needed 

to buy, do, or make something’’); Limitation, 

Cambridge Dictionary, https://dictionary.

cambridge.org/us/dictionary/english/limitation 

(‘‘Limitation’’ is defined as ‘‘something that controls 

or reduces something’’); Benefit, Cambridge 

Dictionary, https://dictionary.cambridge.org/us/ 

dictionary/english/benefit (‘‘Benefit’’ is defined as 

‘‘a helpful or good effect, or something intended to 

help’’). 

188See, e.g., Complaint ¶¶ 26–27, 70–71, Fed. 

Trade Comm’n v. N. Am. Auto. Servs., Inc., No. 

1:22-cv-01690 (N.D. Ill. Mar. 31, 2022) (alleging 

deceptive and unauthorized add-on charges; unfair 

discrimination against minority consumers); 

Complaint ¶¶ 12–19, Fed. Trade Comm’n v. Liberty 

Chevrolet, Inc., No. 1:20–cv–03945 (S.D.N.Y. May 

21, 2020) (alleging deceptive and unauthorized addon charges in consumers’ transactions); Complaint 

¶¶ 59–64, Fed. Trade Comm’n v. Universal City 

Nissan, Inc., No. 2:16-cv-07329 (C.D. Cal. Sept. 29, 

2016) (deceptive and unauthorized add-on charges 

in consumers’ transactions); Complaint ¶¶ 4–14, 

Nat’l Payment Network, Inc., No. C–4521 (F.T.C. 

May 4, 2015) (alleging failure to disclose fees 

associated with financing program; misleading 

savings claims in advertisements); Complaint ¶¶ 4– 

13, Matt Blatt Inc., No. C–4532 (F.T.C. July 2, 2015) 

(alleging failure to disclose fees associated with 

financing program; misleading savings claims). Cf. 

Consent Order ¶¶ 10–16, Santander Consumer 

USA, Inc., CFPB No. 2018–BCFP–0008 (Nov. 20, 

2018) (finding defendant sold GAP product 

allegedly providing ‘‘full coverage’’ to consumers 

with loan-to-value ratios (‘‘LTVs’’) above 125%, 

when in fact coverage is limited to 125% of LTV). 

189See, e.g., Consumer Fin. Prot. Bureau, 

‘‘Supervisory Highlights: Issue 12, Summer 2016’’ 

5 (June 2016), https://files.consumerfinance.gov/f/ 

documents/Supervisory_Highlights_Issue_12.pdf 

(finding that one or more auto lenders deceptively 

advertised the benefits of their GAP agreement 

products, leaving the impression that these 

products would fully cover the remaining balance 

of a consumer’s loan in the event of vehicle loss 

when, in fact, the product only covered amounts 

below a certain loan to value ratio). 

190 It is well-settled that, if one makes a claim 

that, absent additional information, would mislead 

a consumer acting reasonably under the 

circumstances about a material fact, such conduct 

would violate the law. See FTC Policy Statement on 

Deception, supra note 42, at 2; Int’l Harvester Co., 

104 F.T.C. 949, 1057–58 (1984). 

is modifying § 463.3 from the 

Commission’s original proposal to 

include the term ‘‘Material’’ in the 

introductory paragraph rather than in 

paragraphs (b) or (g) of § 463.3. Section 

463.3(b) of the Final Rule therefore 

deletes reference to the term ‘‘Material.’’ 

The Commission received a number 

of comments expressing support for 

prohibiting misrepresentations about 

add-ons, including comments that 

requested specific additional add-onrelated misrepresentation prohibitions. 

For example, an auto dealer commenter 

expressed support for prohibiting 

misrepresentations about whether or not 

a car has add-ons already installed. 

Consumer advocacy organization 

commenters recommended that the 

Commission include a new paragraph in 

§ 463.3 prohibiting misrepresentations 

regarding the consumer’s right to cancel 

add-on products or services. This 

provision, however, already covers such 

conduct: It prohibits misrepresentations 

regarding material information about 

any costs, limitation, benefit, or any 

other aspect of an add-on product or 

service. ‘‘Material’’ means likely to 

affect a consumer’s conduct or 

choices.186 A consumer’s right to cancel 

is likely to affect the consumer’s 

conduct regarding an add-on product or 

service. Thus, § 463.3(b) includes 

representations about a consumer’s right 

to cancel an add-on product or service. 

A number of dealership association 

commenters argued that the language 

used in this provision is vague or 

confusing. The terms ‘‘Material’’ and 

‘‘Add-on Product or Service,’’ however, 

are specifically defined in § 463.2. The 

remaining terms in this provision are 

commonly used and can be understood 

according to their plain meaning.187 The 

NPRM examined misrepresentations 

regarding the coverage and costs of addons, and enforcement actions by the 

Commission and other agencies have 

documented many instances of such 

misrepresentations.188 Examples of the 

type of conduct prohibited include 

misrepresenting whether add-ons are 

required in order to purchase or lease a 

vehicle, including by representing that 

such charges are required when in fact 

they are not, or misrepresenting that 

advertised prices do not include fees 

beyond routine taxes and fees only to 

subsequently require the purchase of 

add-ons; misrepresenting what is, or is 

not, covered by, among others, an 

extended warranty, service or 

maintenance plan, or GAP 

agreement; 189 and misrepresenting that 

consumers have provided express, 

informed consent to be charged for addons. 

Commenters including a number of 

motor vehicle dealership associations 

requested that the Commission clarify 

how extensive disclosures would need 

to be to satisfy this provision. One such 

commenter requested that the 

Commission explain what conduct 

would be required under this paragraph, 

and expressed concern that, if the 

paragraph required disclosures, such a 

requirement would affect the length of 

the transaction. Another industry 

association commenter suggested that, 

in the event dealers provide consumers 

with a verbal or written disclosure 

stating that such products have costs, 

limitations, or benefits, and stating 

information about other material 

aspects, the Commission modify its 

proposal to shift to consumers the 

burden of proving any relevant dealer 

misrepresentation. An individual 

commenter expressed support for 

applying § 463.3(a) and (b) to dealer 

advertisements of free lifetime benefits 

programs and requiring dealers to make 

disclosures about any costs, limitations, 

benefits, or any other aspect of an addon product or service. The Commission 

notes that paragraphs (a) and (b) of 

§ 463.3 already apply to free lifetime 

benefits programs. Regarding 

disclosures, the Commission is 

concerned about including additional 

disclosure requirements beyond the few 

areas included in the Rule, or shifting 

the burden to consumers to hunt for and 

decipher disclosures, given that the auto 

finance and lease process is already 

lengthy, complex, document-heavy, and 

dense. Accordingly, as discussed in 

regard to § 463.3(a), these provisions do 

not mandate set disclosures or allow for 

disclosures to be used as a shield when 

there are misrepresentations to 

consumers; rather, they prohibit express 

or implied misrepresentations.190

Several dealership association 

commenters pointed to State laws that, 

they contended, may already prohibit 

misrepresentations about add-ons or 

may otherwise protect consumers. As 

discussed previously, to the extent there 

may be duplication between the 

provisions the Commission is finalizing 

and other laws, there is no evidence that 

duplicative misrepresentation 

prohibitions have harmed consumers or 

competition. Moreover, the Final Rule 

provides additional remedies that will 

benefit consumers who encounter 

conduct that is already illegal under 

State or Federal law and will assist lawabiding dealers that presently lose 

business to competitors that act 

unlawfully. Under § 463.9, States may 

provide more or less specific 

requirements relating to motor vehicle 

dealers so long as those requirements 

are not inconsistent with part 463, and 

in the event of an inconsistency, the 

Rule only affects such State law to the 

extent of the inconsistency. 

Based on a review of the comments 

and the responses discussed, the 

Commission adopts paragraph (b) of 

§ 463.3 without substantive 

modification. As discussed in SBP 

III.C.1, the Commission has determined 

to modify the introductory paragraph of 

§ 463.3 from the Commission’s original 

proposal so that each paragraph of 

§ 463.3 prohibits misrepresentations 

regarding material information. As such, 

the Commission is finalizing a version 

of § 463.3(b) that removes what would 


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191The FTC has alleged that misrepresentations 

that particular terms are available for financing or 

for a lease violate the FTC Act. See Complaint 

¶¶ 38–39, Fed. Trade Comm’n v. Tate’s Auto Ctr., 

No. 3:18–cv–08176–DJH (D. Ariz. July 31, 2018) 

(alleging false ads touting attractive terms but 

concealing ads were for lease offers only); 

Complaint ¶¶ 10, 13, TC Dealership, L.P., No. C– 

4536 (F.T.C. Aug. 13, 2015) (same); Complaint 

¶¶ 9–12, Cowboy AG, LLC, No. C–4639 (F.T.C. Jan. 

4, 2018) (same); Complaint ¶¶ 36–38, United States 

v. New World Auto Imports, Inc., No. 3:16–cv– 

02401–K (N.D. Tex. Aug. 18, 2016) (alleging 

misrepresentation that terms were for financing 

instead of leasing); Complaint ¶¶ 28–37, 44, Fed. 

Trade Comm’n v. Universal City Nissan, Inc., No. 

2:16–cv–07329 (C.D. Cal. Sept. 29, 2016) (alleging 

advertisements with key terms that were not 

generally available). 

192Section 463.3(d) (emphasis added). 

193See, e.g., Rebate, Cambridge Dictionary, 

https://dictionary.cambridge.org/us/dictionary/ 

english/rebate (last visited Dec. 5, 2023) (defining 

‘‘rebate’’ as ‘‘an amount of money that is returned 

to you, especially by the government, for example 

when you have paid too much tax’’ or ‘‘an amount 

of money that is paid back to you after you have 

paid too much’’); Discount, Cambridge Dictionary, 

https://dictionary.cambridge.org/us/dictionary/ 

english/discount (last visited Dec. 5, 2023) (‘‘[A] 

reduction in the usual price’’). 

194See NPRM section IV.C, 87 FR at 42020 

(proposed § 463.3(d) prohibited misrepresentations 

concerning ‘‘[t]he availability of any rebates or 

discounts that are factored into the advertised price 

but not available to all consumers,’’ and the NPRM 

explained ‘‘[w]hen dealers advertise rebates and 

discounts, or offer prices that factor in such rebates 

and discounts, but in fact those rebates and 

discounts are not available to the typical consumer, 

but only a select set of customers, such conduct 

induces the consumer to select and transact with 

the dealer under false pretenses’’). 

195See, e.g., Complaint ¶¶ 6–13, Jim Burke Auto., 

Inc., No. C–4523 (F.T.C. May 4, 2015) (alleging 

promises of prices and discounts not generally 

available to consumers); Complaint ¶¶ 6, 9, TT of 

Longwood, Inc., No. C–4531 (F.T.C. July 2, 2015) 

(alleging promises of prices and discounts not 

generally available to consumers); Complaint ¶¶ 8– 

9, JS Autoworld, Inc., No. C–4535 (F.T.C. Aug. 13, 

2015) (alleging false ads touting prices but 

concealing discounts with material eligibility 

limitations); Complaint ¶¶ 7–9, TC Dealership, L.P., 

No. C–4536 (F.T.C. Aug. 13, 2015) (alleging false 

ads touting attractive prices but concealing 

Continued 

otherwise be redundant explicit 

reference to the term ‘‘Material.’’ This 

provision prohibits misrepresentations 

regarding ‘‘[a]ny costs, limitation, 

benefit, or any other aspect of an Addon Product or Service.’’ 

Misrepresentations regarding add-ons 

are likely to affect a consumer’s 

conduct, including the consumer’s 

decision to purchase the product or 

service. 

(c) Whether Terms Are, or Transaction 

Is, for Financing or a Lease 

Proposed § 463.3(c) prohibited 

misrepresentations regarding whether 

the terms are, or the transaction is, for 

financing or a lease. Upon review and 

consideration of public comments, the 

Commission is finalizing paragraph (c) 

of § 463.3 without modification from the 

Commission’s original proposal. 

A few industry association and 

individual commenters posited that this 

proposed provision was unnecessary, 

either because other statutes or 

regulations, including TILA and some 

State regulations, address this issue, or 

because vehicle manufacturers already 

monitor such misrepresentations. As 

noted in SBP III.C.1, even given the 

possibility of overlap between this 

provision and existing Federal or State 

law, there is no evidence that 

duplicative misrepresentation 

prohibitions have harmed consumers or 

competition. Further, given that the 

conduct covered by this provision is 

already unlawful under the FTC Act and 

may duplicate other laws, or be 

prohibited by manufacturer rules, it 

should not be difficult to follow this 

provision.191

Accordingly, after careful 

consideration, the Commission adopts 

paragraph (c) of § 463.3 as proposed. 

Misrepresentations regarding whether 

terms are, or a transaction is, for 

financing or a lease are likely to affect 

a consumer’s conduct, including by 

causing consumers to enter into a 

monetary transaction for a product they 

do not want, or, if the true 

circumstances are revealed prior to 

consummation of the transaction, to 

waste time traveling to, and potentially 

spending hours at, the dealership. 

(d) The Availability of Any Rebates or 

Discounts That Are Factored Into the 

Advertised Price but Not Available to 

All Consumers 

Proposed § 463.3(d) prohibited 

misrepresentations concerning the 

availability of any rebates or discounts 

that are factored into the advertised 

price but not available to all consumers. 

Upon review and consideration of 

public comments, the Commission is 

finalizing paragraph (d) of § 463.3 

without modification from the 

Commission’s original proposal. 

Comments in support of this proposed 

provision, including those from a group 

of State attorneys general and from two 

United States Senators, generally 

contended that the proposed provision 

would increase the transparency of the 

purchase transaction by requiring 

dealers to be honest when they advertise 

the availability of discounts. 

An individual commenter suggested 

that the Commission modify proposed 

§ 463.3(d) to require dealers to disclose 

all representations regarding rebates or 

discounts in writing, in a clear and 

conspicuous manner. The Commission 

notes this paragraph prohibits 

misrepresentations regardless of the 

medium. Further, this paragraph focuses 

on misrepresentations; disclosures 

regarding price, add-ons, and total of 

payments are addressed in the 

discussion of § 463.4, as is a discussion 

of why the Commission has determined 

not to include additional disclosure 

requirements in this Final Rule. The 

same commenter also requested that the 

Final Rule text include examples of 

situations where discounts or rebates 

may not be available. The Commission 

describes examples here rather than 

adding them to the Final Rule text, as 

it would be difficult to anticipate all 

such examples and the text would 

become unwieldy. Examples include 

where an advertised rebate or discount 

applies only to the most expensive 

version of a particular vehicle make and 

model or is only available to consumers 

with high credit scores. 

The Commission received comments 

from a dealership association and an 

individual commenter asking for 

additional detail about proposed 

§ 463.3(d), pointing to a State regulation 

that includes disclosures and asking 

which types of rebates the provision 

covers. Here, the Commission notes 

that, as the language in § 463.3(d) states, 

this provision applies to ‘‘any rebates 

and discounts’’ advertised by dealers, 

and is not limited to any particular type 

of rebate or discount.192 The terms in 

this provision may be interpreted 

according to their plain meaning, as 

they are commonly used and 

understood.193 Additionally, the 

language of this provision, the NPRM, 

and Commission enforcement actions 

provide further context. In proposing 

§ 463.3(d) to specifically address the 

availability of discounts and rebates, the 

Commission included additional 

language (‘‘that are factored into the 

advertised price but not available to all 

consumers’’) to describe the manner in 

which such misrepresentations often 

occur: a dealer represents an advertised 

price which includes a discount or 

rebate that is not generally available to 

consumers.194 The NPRM’s discussion 

of proposed § 463.3(d) described both a 

scenario in which a dealer advertised a 

rebate or discount separately, and one in 

which rebates or discounts are factored 

into the advertised price but the rebates 

and discounts are not available to a 

typical consumer. The conduct in either 

such scenario would violate this 

provision and, depending on the 

circumstances, may violate other 

provisions the Commission is finalizing, 

such as paragraph (a) of § 463.3. 

Enforcement actions cited in the NPRM 

provide further illustration of deceptive 

practices involving rebates and 

discounts.195 The Commission declines 


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discounts were subject to material eligibility 

limitations and trade-in requirement); Complaint 

¶¶ 4–5, Timonium Chrysler, Inc., No. C–4429 

(F.T.C. Jan. 28, 2014) (alleging dealership advertised 

internet prices and dealer discounts but failed to 

disclose consumer would have to qualify for 

multiple rebates not generally available to them); 

Complaint ¶¶ 4–5, Ganley Ford West, Inc., No. C– 

4428 (F.T.C. Jan. 28, 2014) (alleging dealership 

advertised discounts on vehicle prices, but failed to 

disclose discounts were only available on the most 

expensive models). 

196See, e.g., Decision and Order, Timonium 

Chrysler, Inc., No. C–4429 (F.T.C. Jan. 28, 2014). 

197See Complaint ¶¶ 4–5, Ganley Ford West, Inc., 

No. C–4428 (F.T.C. Jan. 28, 2014) (alleging false ads 

touting price discount but concealing offer was 

limited to certain high-end models). 

198See Complaint ¶¶ 8–9, JS Autoworld, Inc., No. 

C–4535 (F.T.C. Aug. 13, 2015) (alleging false ads 

touting prices but concealing discounts with 

material eligibility limitations); Complaint ¶¶ 7–9, 

TC Dealership, L.P., No. C–4536 (F.T.C. Aug. 13, 

2015) (alleging false ads touting attractive prices but 

concealing discounts were subject to material 

eligibility limitations and trade-in requirement); 

Complaint ¶ 14, TXVT Ltd. P’ship, No. C–4508 

(F.T.C. Feb. 12, 2015) (alleging false ads failed to 

disclose that it would match consumers’ income tax 

refunds only up to $1,000); Complaint ¶¶ 4–5, 

Timonium Chrysler, Inc., No. C–4429 (F.T.C. Jan. 

28, 2014) (alleging false ads touting pricing and 

discounts but concealing material qualifications 

and restrictions); Complaint ¶¶ 6, 9, TT of 

Longwood, Inc., No. C–4531 (F.T.C. July 2, 2015) 

(alleging promises of prices and discounts not 

generally available to consumers); Complaint ¶¶ 6– 

13, Jim Burke Auto., Inc., No. C–4523 (F.T.C. May 

4, 2015) (alleging promises of prices and discounts 

not generally available to consumers); see also Auto 

Buyer Study, supra note 25, at 8 (‘‘A number of 

[study] participants were attracted by promotional 

offers in ads that they did not qualify for, but did 

not realize that they did not qualify until they got 

to the dealer. Some did not learn that they did not 

qualify until they got to the financing stage of the 

transaction.’’). 

199The commenter also expressed concern about 

misrepresentations regarding the refundability of 

deposits and recommended that the Commission 

include language in § 463.3(e) addressing this issue. 

Because representations and practices regarding the 

refundability of deposits are related to the costs or 

terms of purchasing, financing, or leasing a vehicle, 

this issue is covered by § 463.3(a). Thus, the 

Commission declines to adopt the commenter’s 

recommendation. 

to add additional requirements, such as 

disclosure requirements, to its Final 

Rule, given the already lengthy, 

complex, and document-heavy nature of 

auto transactions. 

A number of dealership association 

commenters contended that the 

proposed paragraph would prohibit 

dealers from displaying beneficial 

information to consumers or would 

prohibit dealers from advertising rebates 

and incentives of limited availability. In 

addition, commenters including one 

such dealership association requested 

that the Commission adopt an approach 

the commenter contended is used in 

some States: allowing dealers to display, 

below the advertised sales price, a 

rebate or incentive that is not available 

to all purchasers. Moreover, a number of 

industry association and dealership 

association commenters argued that the 

proposed paragraph was more stringent 

than, and inconsistent with, the 

Commission’s prior articulation of the 

deception standard, further noting the 

existence of Commission orders that 

prohibit defendants from representing 

that a price, discount, rebate, or other 

incentive is available, unless it is in fact 

available to all or unless a defendant 

provides a clear and conspicuous 

disclosure of any qualifications or 

restrictions. Section 463.3(d) prohibits 

misrepresentations; it does not prohibit 

a dealer from advertising, in a truthful 

manner, rebates or discounts with 

limitations. Thus, this paragraph allows 

for the representation of limited offers, 

as long as such representation is 

truthful, and any limitations are clear 

and conspicuous to consumers. The 

paragraph is also consistent with the 

Commission’s prior enforcement order 

practice in this area, which both 

prohibits misrepresentations regarding 

rebates and prohibits representations 

regarding rebates without disclosing any 

material qualifications or restrictions.196

The paragraph simply contains one of 

these prohibitions but not the second. 

A dealership association commenter 

expressed concern that this proposed 

provision would penalize dealers if 

consumers were to confuse a rebate or 

discount offered for one vehicle with a 

vehicle that does not contain such an 

offer. As under current law, dealers are 

prohibited under § 463.3(d) from both 

express and implied misrepresentations. 

If, for example, a dealer states or implies 

that a discount is available on several 

types of vehicles when, in truth, the 

discount is only available on one such 

type of vehicle, such conduct would 

violate this paragraph. If, alternatively, 

the dealer does not state or imply that 

a discount is available for several types 

of vehicles, and offers a discount for one 

type of vehicle, this conduct would not 

violate this paragraph, as long as the 

dealer makes no other express or 

implied misrepresentations. 

After careful review of the comments, 

the Commission is adopting paragraph 

(d) of § 463.3 as proposed. When dealers 

advertise rebates or discounts in a 

misleading manner, including when 

such rebates or discounts are not 

available to the typical consumer, or 

apply only to the most expensive 

versions of the make and model,197 such 

conduct induces consumers to select 

and transact with the dealer under false 

pretenses.198

(e) The Availability of Vehicles at an 

Advertised Price 

Proposed § 463.3(e) prohibited 

misrepresentations regarding the 

availability of vehicles at an advertised 

price. Upon reviewing the comments 

pertaining to this provision, the 

Commission is finalizing paragraph (e) 

of § 463.3 largely as proposed, with the 

minor modification of capitalizing the 

defined term ‘‘Vehicles.’’ 

One individual commenter 

recommended that proposed § 463.3(e) 

be expanded to prohibit certain specific 

misrepresentations about advertised 

vehicle availability, including whether 

any specific vehicle is already reserved 

for another consumer; whether the 

availability is subject to a requirement 

that the consumer pay a deposit; and 

regarding the amount of time until the 

vehicle becomes available. Another 

individual commenter recommended 

that the Rule require disclosure of how 

long each vehicle has been in the 

dealer’s inventory, to prevent dealers 

from misrepresenting that a vehicle 

recently became available. Here, the 

Commission notes that, to the extent 

any such misrepresentations regarding 

the availability of vehicles were made 

with express or implied reference to the 

price of the vehicle, each would be 

prohibited by § 463.3(e).199

Furthermore, to the extent such 

misrepresentations included reference 

to the subject of another paragraph of 

§ 463.3, they would be prohibited by the 

Final Rule. For example, if an 

advertisement were to make a claim 

about the monthly payment for a 

specific vehicle, but the vehicle is not 

actually available, it would be covered 

under the bar against misrepresentations 

regarding costs or terms in paragraph (a) 

of § 463.3. In addition, under the Final 

Rule, dealers are also subject to 

disclosure requirements under § 463.4, 

including the requirement at § 463.4(a) 

to disclose the vehicle’s offering price in 

any advertisement that references a 

specific vehicle, or any monetary 

amount or financing term for any 

vehicle. And if a dealer discloses the 

offering price for a vehicle, but the 

vehicle is not available to consumers, 

§ 463.3(e) applies. Beyond this, the 

Commission will continue to monitor 

whether other misrepresentations 

regarding availability are being made 

without reference to price, or to the 

subject of another paragraph of § 463.3, 

to determine whether additional action 

is warranted. 

The Commission received comments 

from a number of dealership 

associations and individuals requesting 

that the Final Rule limit dealers’ 

responsibility for unanticipated delays, 

or otherwise expressing concern about 


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200FTC Policy Statement on Deception, supra 

note 42, at 1 n.5 (‘‘Advertising that lacks a 

reasonable basis is also deceptive.’’) (citing 

Firestone Tire & Rubber Co., 81 F.T.C. 398, 451–52 

(1972) (additional citations omitted)); see Fed. 

Trade Comm’n v. US Sales Corp., 785 F. Supp. 737, 

748 (N.D. Ill. 1992) (‘‘Apart from challenging the 

truthfulness of an advertiser’s representations, the 

FTC may challenge the representation as 

unsubstantiated if the advertiser lacked a 

reasonable basis for its claims.’’); see also Fed. 

Trade Comm’n v. Am. Screening, LLC, 4:20–CV– 

01021–RLW (E.D. Mo. July 14, 2022) (granting 

summary judgment for the FTC upon finding that 

American Screening’s claim that its COVID–19 

protective equipment was available and would ship 

quickly was false and lacked a reasonable basis); 

Fed. Trade Comm’n v. John Beck Amazing Profits, 

LLC, 865 F. Supp. 2d 1052 (C.D. Cal. 2012) (finding 

that the defendants’ representations were 

unsubstantiated in violation of section 5, because 

Defendants conceded that during the time period in 

which their infomercial was aired they did not have 

evidence supporting their representations that 

consumers who purchased their product would be 

able to earn money easily and because survey 

results revealed that less than one percent of 

consumers actually generated any revenue or 

profits); Fed. Trade Comm’n v. Elegant Sols., Inc., 

8:19–cv–01333–JVS–KES (C.D. Cal., July 6, 2020) 

(finding that defendants made false or 

unsubstantiated representations, including 

representing that consumers would be enrolled in 

a repayment plan that may be forgiven after a 

specific number of years even though there were no 

Federal loan forgiveness programs with those 

repayment terms). 

201Fed. Trade Comm’n, ‘‘FTC Policy Statement 

Regarding Advertising Substantiation,’’ (appended 

to In re Thompson Med. Co., Inc., 104 F.T.C. 648, 

839 (1984)); Fed. Trade Comm’n v. John Beck 

Amazing Profits, LLC, 865 F. Supp. 2d 1052, 1067 

(C.D. Cal. 2012). 

202Fed. Trade Comm’n, ‘‘FTC Policy Statement 

Regarding Advertising Substantiation,’’ (appended 

to In re Thompson Med. Co., Inc., 104 F.T.C. 648, 

839 (1984)); see Fed. Trade Comm’n v. Am. 

Screening, LLC, 4:20–CV–01021–RLW (E.D. Mo., 

July 14, 2022) (granting FTC’s motion for summary 

judgment and finding that Defendants’ 

representations that it had protective equipment in 

stock and would ship it to consumers within seven 

to ten business days were material to consumers 

seeking such equipment during a global pandemic). 203This provision would not prohibit dealers 

from advertising a vehicle with limitations on 

availability in a truthful manner, such that any 

limitations are clear and conspicuous to the 

consumer. For example, dealers should not 

affirmatively represent that a vehicle is available on 

its lot without a reasonable basis that the vehicle 

is on the lot or without clearly and conspicuously 

noting that the vehicle will be made available after 

transfer from an affiliate’s lot. 

204Comment of Tex. Auto. Dealers Ass’n, Doc. 

No. FTC–2022–0046–8102 at 21; see 43 Tex. 

Admin. Code 215.247(2) (2023). 

how dealers would be able to comply 

with this proposed provision. One 

industry association commenter stated 

that unanticipated delays could result 

from factors beyond the reasonable 

control of the dealer, such as shipping 

or production issues. Other dealership 

association commenters contended that, 

because of supply chain disruptions, 

adjustments to inventory and other 

information may not always be 

displayed on a retailer’s website 

instantaneously. 

As is the case under current law, 

under this provision, dealers may not 

make claims about the availability of 

vehicles at an advertised price without 

a reasonable basis at the time the claims 

are made.200 Objective claims about 

products or services represent, 

explicitly or by implication, that an 

advertiser has a reasonable basis to 

support those claims.201 Consumers 

would be less likely to be affected by 

claims for products and services if they 

knew the advertiser did not have a 

reasonable basis for believing them to be 

true.202 If a dealer has a reasonable basis 

to make a claim about the availability of 

vehicles at the time the claim is made, 

the dealer would not be in violation of 

the provision if a vehicle later becomes 

unavailable because of circumstances 

that a dealer could not reasonably 

anticipate or control. 

A few dealership association 

commenters claimed that promulgation 

of § 463.3(e) would cause regulatory 

confusion because State guidelines or 

rules already address issues about the 

availability of vehicles, including, for 

example, by requiring dealers to note 

the location of the vehicle.203 As 

described in SBP III.C.1, States may 

provide more or less specific 

requirements relating to motor vehicle 

dealers so long as those requirements 

are not inconsistent with part 463, and 

in the event of an inconsistency, the 

Rule only affects such State law to the 

extent of the inconsistency. To the 

extent there are actual inconsistencies, 

§ 463.9 is clear that this Rule’s 

prohibition against misrepresentations 

controls. 

After careful consideration of the 

comments, the Commission is adopting 

paragraph (e) of § 463.3 largely as 

proposed, with the minor modification 

of capitalizing the defined term 

‘‘Vehicles.’’ This paragraph prohibits 

dealers from promoting low prices for 

specific vehicles, but then later 

misrepresenting, among other things, 

that the advertised vehicle is no longer 

available or no longer available at the 

advertised price. Such 

misrepresentations are likely to induce 

consumers to waste their time traveling 

to a particular dealership to pursue a 

specific offer on a specific vehicle when 

the offer or vehicle itself may not 

actually be available. 

(f) Whether Any Consumer Has Been or 

Will Be Preapproved or Guaranteed for 

Any Product, Service, or Term 

Proposed § 463.3(f) prohibited 

misrepresentations regarding whether a 

consumer has been or will be 

preapproved or guaranteed for any 

product, service, or term. Upon 

reviewing public comments, the 

Commission is finalizing paragraph (f) 

of § 463.3 without modification from the 

Commission’s original proposal. 

One dealership association 

commenter recommended that 

compliance with a State law that 

prohibits certain misleading statements, 

such as ‘‘we finance anyone’’ and ‘‘no 

credit rejected’’ and similar statements, 

should function as a safe harbor against 

liability under this proposed 

paragraph.204 Yet, while compliance 

with the State law cited may require 

dealers to refrain from using certain 

frequently misleading statements, as 

described by the commenter, that law 

does not generally prohibit all 

misrepresentations regarding material 

information about consumer 

preapprovals or guarantees; even if it 

did, there is no evidence that 

duplicative laws prohibiting 

misrepresentations harm consumers or 

competition, and no evidence of 

benefits to consumers or competition in 

allowing one such law to act as a safe 

harbor against another such law. 

Further, given that current law already 

prohibits deceptive conduct generally, 

dealers should be able to comply with 

the Commission’s Rule, which provides 

further protections for consumers and 

law-abiding dealers. Thus, the 

Commission declines to adopt the 

recommended safe harbor. 

Therefore, after careful consideration, 

the Commission is finalizing paragraph 

(f) of § 463.3. Misrepresentations 

regarding preapproval or guarantees for 

a product, service, or term—as with 

misrepresentations about availability 

and price, described previously—are 

likely to impact consumers’ conduct 

with regard to motor vehicle sales, 

financing, or leasing transactions, 

including by inducing consumers to 

waste time pursuing illusory offers. 

(g) Any Information on or About a 

Consumer’s Application for Financing 

Proposed § 463.3(g) prohibited dealers 

from misrepresenting any material 

information on or about a consumer’s 

application for financing. After carefully 

reviewing public comments, the 

Commission is adopting paragraph (g) of 

§ 463.3 without substantive 

modification. As with § 463.3(b), the 

only adopted modification is the 

deletion of the term ‘‘Material,’’ which 

nonetheless applies to the operation of 

each of the misrepresentation 

paragraphs in § 463.3, including 

paragraph (g), through the addition of 

the term in the introductory paragraph 

of § 463.3. 


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205 Individual commenter, Doc. No. FTC–2022– 

0046–7445 at 12. 

206See Complaint ¶¶ 18–36, Fed. Trade Comm’n 

v. Tate’s Auto Ctr. of Winslow, Inc., No. 3:18–cv– 

08176–DJH (D. Ariz. July 31, 2018); Consumer Fin. 

Prot. Bureau, ‘‘Supervisory Highlights: Issue 30, 

Summer 2023’’ 5 (July 2023), https://files.consumer

finance.gov/f/documents/cfpb_supervisoryhighlights_issue-30_2023-07.pdf (finding that 

dealers ‘‘fraudulently included’’ in financing 

documents add-ons, such as undercoating, that 

were not actually present on the vehicle, creating 

‘‘improperly inflated loan amounts’’ that caused 

consumers to pay improper additional interest). 

The Commission received a number 

of comments regarding this provision, 

including comments that expressed 

support for prohibiting 

misrepresentations about a consumer’s 

application for financing. 

A credit union commenter requested 

that, in addition to this proposal, the 

Commission consider implementing a 

requirement to clearly and 

conspicuously disclose any potential 

financing limitations prior to vehicle 

purchase negotiations, contending that 

such a measure would better enable 

consumers to choose a motor vehicle 

dealer and financing option that best 

serves their needs. To the extent a 

dealer misrepresents a consumer’s 

financing options or limitations, 

including prior to or during the process 

of selling, leasing, or arranging 

financing for a vehicle, such conduct is 

prohibited by this provision, and 

depending on the circumstances, may 

also violate other provisions of the Rule. 

For example, as discussed in this 

paragraph-by-paragraph analysis, 

§ 463.3(a) of the Final Rule prohibits 

misrepresentations regarding the cost or 

terms of financing a vehicle; this 

prohibition includes misrepresentations 

about available vehicle financing. 

Furthermore, this provision pertains to 

misrepresentations; comments 

pertaining to proposed disclosures 

regarding price, add-ons, and total of 

payments are examined in the 

Commission’s discussion of § 463.4, 

wherein the Commission explains its 

determination not to finalize any 

additional disclosure requirements not 

included in its NPRM. 

An individual commenter, while 

expressing support for regulation of 

such misrepresentations, also noted 

concern for the ‘‘grave consequences of 

falsifying information on a customer’s 

application for financing,’’ and urged 

the Commission to consult with other 

law enforcement agencies to further 

address such problems.205 The 

Commission appreciates the concern 

and the seriousness of falsifying 

information on a consumer’s application 

for financing, and coordinates regularly 

with other law enforcement agencies 

regarding areas of shared jurisdiction 

and responsibility, including motor 

vehicle sales and financing. The 

Commission will continue to monitor 

financing application falsification issues 

to determine whether any additional 

action, beyond § 463.3(g), is needed. 

A number of dealership association 

commenters contended that the 

proposed language was vague and did 

not adequately explain the type of 

behavior this paragraph would prohibit. 

Relatedly, some dealership association 

commenters contended that this 

provision lacked specific guidance 

about what a motor vehicle dealer must 

or must not disclose. This provision, 

however, utilizes terms which are 

commonly used and understood, and 

which may be interpreted according to 

their plain meaning. Read together with 

the introductory paragraph of § 463.3, 

§ 463.3(g) prohibits misrepresentation 

. . . regarding material information 

about ‘‘[a]ny information on . . . a 

consumer’s application for financing.’’ 

By its terms, this prohibition includes 

any misrepresentations of material 

information on a financing application. 

For example, dealers would make 

misrepresentations in violation of this 

provision by including, on a consumer’s 

application that is submitted to a thirdparty financing institution, consumer 

income information that is different 

from what the consumers have stated to 

the dealer that the consumers actually 

earn, or by representing a different 

down payment amount than the amount 

the consumer has actually provided, or 

by misrepresenting that the vehicle is 

being sold or leased with certain add-on 

products.206 Moreover, as described in 

detail with regard to other paragraphs of 

§ 463.3, this provision does not require 

any particular affirmative disclosures, 

instead obligating dealers to refrain from 

certain misrepresentations. 

One dealership association 

commenter questioned whether a dealer 

would be held responsible for a 

customer’s false statement about his or 

her income. If a consumer falsely states 

they have a higher income, that 

consumer would not be misled into 

thinking he has a higher income. If, 

however, a consumer’s application 

falsely states a higher income because a 

dealer has altered the information, that 

consumer would be misled into 

thinking that the application they are 

signing accurately reflects the 

information the consumer provided, and 

§ 463.3(g) would be violated. 

Additionally, if a dealer advises a 

consumer to include other sources of 

payment as income or advises the 

consumer to list a higher income in 

other ways, such conduct may mislead 

the consumer into thinking that it is 

proper to calculate income for auto 

retail installment contracts in a 

particular way, and there may be a 

violation of § 463.3(g). 

After careful review and 

consideration of the comments, the 

Commission adopts paragraph (g) of 

§ 463.3 without substantive 

modification, prohibiting 

misrepresentations regarding material 

information about any information on or 

about a consumer’s application for 

financing. It is likely to affect a 

consumer’s choices if the consumer 

knows a dealer is misrepresenting the 

consumer’s income, or other aspects of 

financing applications. If, for example, a 

consumer knew the truth—that the 

dealer is inflating the consumer’s 

income such that the consumer would 

not otherwise obtain financing for a 

particular vehicle—the consumer might 

opt to finance a less expensive car, 

rather than risking repossession. 

Material misrepresentations on 

consumers’ financing paperwork are 

also likely to cause consumers 

substantial injury, including by causing 

them to take on debt beyond that which 

the financing company would have 

approved, and increasing the risk of 

repossession and harmful consequences 

to consumers’ credit. Consumers cannot 

avoid the injury from dealers 

misrepresenting the information 

consumers provide them, and this 

practice provides no countervailing 

benefits to consumers or competition. 

(h) When the Transaction Is Final or 

Binding on All Parties 

(i) Keeping Cash Down Payments or 

Trade-In Vehicles, Charging Fees, or 

Initiating Legal Process or Any Action If 

a Transaction Is Not Finalized or If the 

Consumer Does Not Wish To Engage in 

a Transaction 

Proposed § 463.3(h) prohibited 

dealers from misrepresenting when the 

transaction is final or binding on all 

parties. Proposed § 463.3(i) prohibited 

dealers from making misrepresentations 

about keeping cash down payments or 

trade-in vehicles, charging fees, or 

initiating legal process or any action if 

a transaction is not finalized or if the 

consumer does not wish to engage in a 

transaction. After careful review and 

consideration of the comments, the 

Commission is finalizing paragraphs (h) 

and (i) of § 463.3 with the minor 

modification of capitalizing the defined 

term ‘‘Vehicles’’ in § 463.3(i) to conform 

with the revised definition at § 463.2(e). 

Some commenters, including a group 

of State attorneys general and consumer 


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207Complaint ¶¶ 67–72, Fed. Trade Comm’n v. 

Universal City Nissan, Inc., No. 2:16–cv–07329 

(C.D. Cal. Sept. 29, 2016); State ex rel. Dewine v. 

Dads Car Lot Inc., No. 13–cv–4036, 2014 BL 

468717, at * 1 (Ohio Com. Pl. June 6, 2014) (finding 

defendant violated State consumer sales practices 

act by including ‘‘spot delivery’’ document that 

allowed defendant to keep ‘‘all funds on deposit’’); 

Att’ys Gen. of 31 States & DC, Comment Letter on 

Public Roundtables: Protecting Consumers in the 

Sale and Leasing of Motor Vehicles, Project No. 

P104811, Submission No. 558507–00112 at 4 (Apr. 

13, 2012), https://www.ftc.gov/sites/default/files/ 

documents/public_comments/public-roundtablesprotecting-consumers-sale-and-leasing-motorvehicles-project-no.p104811-00112/00112- 

82927.pdf (recommending, among other rules 

aimed at deterring yo-yo sales, FTC adopt rules that 

would require dealers to disclose the consumer’s 

‘‘right to walk away’’ if financing is rejected and, 

in the context of spot delivery, to disclose financing 

has not been finalized as well as the responsibilities 

and potential consequences for consumers); Legal 

Aid Just. Ctr., Comment Letter on Public 

Roundtables: Protecting Consumers in the Sale and 

Leasing of Motor Vehicles, Project No. P104811, 

Submission No. 558507–00066 at 26, 29 (Jan. 30, 

2012), https://downloads.regulations.gov/FTC-2022- 

0036-0062/attachment_2.pdf (explaining that in a 

yo-yo sale the dealer misrepresents to the consumer 

that credit has been finalized, when in fact the 

dealer treats the sale as contingent, retaining the 

ability to call off or seize the vehicle later; a ‘‘yo-yo 

case can result in substantial distress to the person 

who has been tricked’’; and ‘‘[t]he harm to the 

marketplace occurs when the consumer believes a 

credit sale has been completed and stops shopping 

for a car on credit’’); Nat’l Consumer L. Ctr., ‘‘In 

Harm’s Way—At Home: Consumer Scams and the 

Direct Targeting of America’s Military and 

Veterans’’ 41 (May 2003), https://filearchive.nclc.

org/special_projects/military/report-scams-facingmilitary.pdf (listing ‘‘Spot Delivery’’ or ‘‘yo-yo 

sales’’ among scams commonly aimed at military 

members). 208See Orkin Exterminating Co., Inc., 108 F.T.C. 

263 (1986), aff’d sub nom. Orkin Exterminating Co. 

v. F.T.C., 849 F.2d 1354 (11th Cir. 1988) (finding 

that defendant’s practice of unilaterally raising 

consumers’ annual renewal fees where the 

consumers’ contracts contained a ‘‘lifetime 

guarantee’’ as to the amount of the fee was unfair 

under section 5 of the FTC Act); see also First 

Amended Complaint ¶¶ 59–61, Fed. Trade Comm’n 

v. BF Labs, Inc., No. 4:14–cv–00815 (W.D. Mo. May 

14, 2015) (alleging as unfair defendants’ practice of 

unilaterally failing to provide paid-for services 

while refusing to refund consumers’ upfront 

payments). 

209Fed. Trade Comm’n, ‘‘FTC Policy Statement 

Regarding Advertising Substantiation,’’ (appended 

to In re Thompson Med. Co., Inc., 104 F.T.C. 648, 

839 (1984)); Fed. Trade Comm’n v. John Beck 

Amazing Profits, LLC, 865 F. Supp. 2d 1052, 1067 

(C.D. Cal. 2012). 

210On May 31, 2023, the Commission received a 

petition for rulemaking under 16 CFR 1.31 

regarding yo-yo financing. Petition for Rulemaking 

Concerning the Finality of a Car Purchase (Yo-Yo 

Financing), Doc. No. FTC–2023–0035–0002. The 

Commission will address this petition separately. 

advocacy organizations, generally 

supported prohibiting 

misrepresentations about when the 

transaction is final or binding on all 

parties but urged the Commission to 

include additional requirements or 

prohibitions. For instance, several 

commenters, including consumer 

advocacy organizations and individual 

commenters, requested that the 

Commission add to its Final Rule a 

provision requiring dealers to include, 

in every consumer credit contract, a 

finality clause stating that the 

transaction is final as soon as the 

consumer credit contract is signed, or 

alternatively, a provision requiring 

dealers to include in retail installment 

contracts a clause prohibiting financingcontingent sales. Commenters including 

a group of State attorneys general 

recommended that the Commission 

require any dealer that does not 

ultimately secure financing under 

previously presented terms to unwind 

the transaction, return any down 

payment in full, and return any tradedin vehicle. Such commenters also 

recommended that the Commission 

implement restrictions, such as 

requiring dealers to be reasonably 

certain that a consumer will qualify for 

quoted financing terms; requiring a 

written disclosure that the consumer 

must sign advising the consumer that 

financing is not final; or setting a short 

deadline by which the dealer must 

either arrange financing or cancel the 

transaction. Other commenters, 

including a State consumer protection 

agency, also supported requiring the 

contractual contingency to be disclosed 

conspicuously and limiting the 

contingency to a short period of time. A 

number of these commenters, including 

consumer advocacy organizations, 

provided examples of how spot delivery 

transactions can harm consumers. 

The provision’s prohibitions and 

requirements address many of these 

commenters’ concerns regarding spot 

delivery and yo-yo financing. Spot 

delivery and yo-yo financing refer to 

situations where a dealer delivers a 

vehicle to a consumer on the spot before 

the financing or leasing has been 

finalized, leads a consumer to believe 

that the transaction is final, and then 

later directs the consumer to return the 

vehicle and engages in certain tactics, 

such as failing to return the consumer’s 

trade-in vehicle while refusing to honor 

the finance or lease transaction, or 

pressuring the consumer to enter into a 

new transaction.207 Paragraphs (h) and 

(i) of § 463.3 prohibit misrepresentations 

regarding the finality of the transaction 

and return of down payments and tradein vehicles. Under these provisions, if a 

consumer is under the impression that 

the transaction is final, and the dealer 

subsequently causes the consumer to 

return the vehicle to the lot because the 

transaction was not final, or the dealer 

takes or threatens to take possession of 

the vehicle but refuses to return the 

down payment or trade-in vehicle, the 

dealer has violated either § 463.3(h), by 

misrepresenting the finality of the 

transaction, or § 463.3(i), by falsely 

representing, expressly or by 

implication, that the dealer has a legal 

basis to keep the down payment or 

trade-in vehicle in the event the 

transaction is not finalized, or both.208

Regarding the recommendation to 

include a requirement that dealers be 

reasonably certain that consumers will 

qualify for quoted financing terms, the 

Rule the Commission is finalizing 

already contains several provisions in 

addition to § 463.3(h) and (i) that 

address this conduct. For example, the 

Rule prohibits misrepresentations 

regarding material information about the 

costs or terms of financing (§ 463.3(a)), 

or about whether any consumer has 

been or will be preapproved or 

guaranteed for any product, service, or 

term (§ 463.3(f)). As explained in the 

paragraph-by-paragraph analysis of 

§ 463.3(e) in SBP III.C.2(e), existing law 

requires dealers to have a reasonable 

basis for their claims. Objective claims 

about products or services represent, 

explicitly or by implication, that an 

advertiser has a reasonable basis to 

support those claims.209 Thus, to avoid 

misrepresentation, dealers must 

reasonably believe that consumers will 

qualify for quoted financing terms, or 

that the transaction will be finalized on 

the terms presented, in order to 

represent such terms to consumers. 

Regarding additional provisions that 

would require certain contractual 

measures, such as finality clauses or 

prohibitions against financingcontingent sales, the Commission is 

concerned that requiring specific 

contract provisions would obligate 

dealers that are not engaged in spot 

delivery to change their contracts even 

though their customers do not 

experience harm stemming from spot 

delivery practices. Before requiring any 

such changes, the Commission has 

determined to continue to monitor the 

market to evaluate whether additional 

steps are warranted.210

Some commenters, including 

dealership associations, requested that 

the Commission clarify how dealers 

could document compliance with these 

proposed provisions, such as how 

dealers could establish that appropriate 

disclosures had been made. One such 

commenter, for instance, asked whether 

written agreements required by State 

law were sufficient to satisfy the 

requirements of these provisions. As 

noted elsewhere in this paragraph-byparagraph analysis of § 463.3 in SBP 

III.C.2, these provisions do not require 

any particular affirmative disclosures, 

instead obligating dealers to refrain from 


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211See NPRM at 42020–21. Individual 

commenter, Doc. No. FTC–2022–0046–9469 at 5–6. 

212One commenter questioned whether this 

section would prohibit a dealer from retaining a 

down payment on a special order vehicle where the 

customer refuses to take delivery of the vehicle. 

Comment of Minn. Auto. Dealers Ass’n, Doc. No. 

FTC–2022–0046–8670 at 10. Sections 463.3(h) and 

(i) prevent misrepresentations, including 

misrepresenting that a dealer can keep a down 

payment when a dealer does not have a legal basis 

to do so. If the dealer does not make a 

misrepresentation, this provision would not be 

violated. 213See SBP I.A, n.3. 

certain misrepresentations. Section 

463.6 discusses records dealers need to 

keep to demonstrate compliance with 

the requirements of the Final Rule, and 

enumerates five such categories of 

records, including copies of finance and 

lease documents signed by the 

consumer, whether or not final approval 

is received for a financing or lease 

transaction. The Commission declines 

to include in this Final Rule additional 

requirements regarding any specific 

documents dealers must keep in order 

to demonstrate compliance with 

§ 463.3(h) or (i). 

One individual commenter requested 

that the Commission include in the CFR 

the examples of harmful conduct related 

to yo-yo financing that it published in 

the NPRM.211 The Commission has 

determined that each such example 

describes conduct that violates this 

rulemaking. Rather than adding them to 

the text of the Final Rule, the 

Commission repeats those examples in 

this paragraph-by-paragraph analysis of 

§ 463.3(h) and (i), in order to avoid 

voluminous modifications to the Rule 

text itself. 

Commenters including a dealership 

association asserted that the issue of 

when a contract is final or binding is 

one of State law, and thus it is within 

the purview of each State to determine 

when a contract is final or binding, 

arguing that § 463.3(h) therefore should 

be removed from the Final Rule. 

Another such commenter contended 

that even courts experienced in contract 

interpretation have difficulty 

determining when an agreement is final, 

and that dealers therefore are likely to 

transgress this prohibition in proposed 

§ 463.5(h) accidentally. This provision, 

however, requires that a dealer’s express 

or implied representations regarding 

material information be truthful, which 

is consistent with current law and with 

the Commission’s authority to prohibit 

unfair or deceptive acts or practices. 

Moreover, under § 463.9, this Rule does 

not affect State law pertaining to 

contracts so long as State law is not 

inconsistent with part 463, and in the 

event of an inconsistency, the Rule only 

affects such State law to the extent of 

the inconsistency.212 In the case of 

§ 463.3(h), for example, an 

inconsistency would include State law 

allowing material misrepresentations 

regarding whether transactions are final; 

the Commission is unaware of any such 

law. Further, to the extent dealers are 

concerned they may transgress this 

prohibition because courts have had 

difficulty interpreting their contracts, 

then, as they should be doing under 

current law prohibiting 

misrepresentations, dealers should 

carefully consider the net impression 

they are conveying with the language 

they use, both in their contracts and in 

the context in which these contracts are 

presented, as such language may 

confuse consumers as well. 

Several dealership association 

commenters claimed that State law 

already prohibits misrepresentations 

about spot delivery transactions or 

otherwise protects consumers in such 

transactions. One such commenter 

asserted that Massachusetts law 

prohibits spot deliveries, and cautioned 

the FTC not to create uncertainty with 

its Rule such that one might think spot 

deliveries are allowed in Massachusetts. 

Another such commenter asked whether 

this provision applies in addition to 

State law or instead of it. Other 

commenters, including consumer 

advocacy organizations, asserted that 

less than half of the States have statutes, 

regulations, or administrative 

pronouncements about yo-yo 

transactions; that there are significant 

variations in such law from State to 

State; and that State regulation often 

does not provide sufficient protections 

for consumers. As described throughout 

the paragraph-by-paragraph analysis of 

§ 463.3 in SBP III.C.2, State law may 

provide more or less specific 

requirements than those under the Final 

Rule as long as those requirements are 

not inconsistent with part 463, and in 

the event of an inconsistency, the Rule 

only affects such State law to the extent 

of the inconsistency. As for any States 

that prohibit spot delivery, such 

prohibitions are consistent with the 

provisions of this Rule. Finally, as to 

whether additional provisions are 

warranted to protect consumers, the 

Commission will continue to monitor 

the market to make this determination. 

Commenters including an industry 

association contended that the 

Commission should not take action to 

disrupt spot delivery transactions to 

consumers, stating that there may be 

reasons to keep down payments even 

when consumers are not permitted to 

keep the vehicle, or claiming that 

although abusive spot deliveries have 

occurred, they are not a systemic 

problem in the marketplace. The 

Commission, however, need not show 

that abusive spot deliveries are systemic 

in order to finalize these provisions 

barring misrepresentations.213 Further, 

these misrepresentation prohibitions do 

not alter requirements under current 

law prohibiting dealers from making 

express or implied misrepresentations. 

After careful consideration of the 

recommendations and record, the 

Commission has determined to finalize 

paragraphs (h) and (i) of § 463.3 largely 

as proposed, with the minor 

modification of capitalizing the defined 

term ‘‘Vehicles’’ in § 463.3(i). The 

Commission notes, however, that it has 

significant concerns about consumer 

harm due to yo-yo financing and will 

continue to examine these issues even 

as it finalizes these prohibitions against 

certain misrepresentations. 

Misrepresentations about when the 

transaction is final or binding on all 

parties, as well as about keeping down 

payments or trade-in vehicles, charging 

fees, or initiating legal process or any 

action, are likely to affect consumer 

conduct, including regarding whether to 

enter into a new transaction with less 

beneficial terms for the consumer, and 

are likely to mislead consumers. 

(i) Keeping Cash Down Payments or 

Trade-In Vehicles, Charging Fees, or 

Initiating Legal Process or Any Action If 

a Transaction Is Not Finalized or If the 

Consumer Does Not Wish To Engage in 

a Transaction 

Proposed § 463.3(i) is discussed with 

§ 463.3(h). 

(j) Whether or When a Dealer Will Pay 

Off Some or All of the Financing or 

Lease on a Consumer’s Trade-in Vehicle 

Proposed § 463.3(j) prohibited 

misrepresentations regarding whether or 

when a motor vehicle dealer will pay off 

some or all of the financing or lease on 

a consumer’s trade-in vehicle. The 

Commission is finalizing paragraph (j) 

of § 463.3 largely as proposed, with 

minor modifications—substituting 

‘‘Dealer’’ for ‘‘Motor Vehicle Dealer’’ 

and capitalizing ‘‘Vehicle’’—to conform 

with the revised definitions of 

‘‘ ‘Covered Motor Vehicle’ or ‘Vehicle’ ’’ 

and ‘‘ ‘Covered Motor Vehicle Dealer’ or 

‘Dealer’ ’’ at § 463.2(e) and (f). 

The Commission received several 

comments in response to this paragraph, 

including from individual commenters 

who expressed support for prohibiting 

dealers from misrepresenting whether 

they would pay off outstanding balances 


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214See, e.g., Individual commenter, Doc. No. 

FTC–2022–0046–3770 (‘‘I agree that these changes 

need to take place. No one should have to pay what 

was owed on a trade in after the dealership said 

they would pay off the trade in . . . .’’). 

215For example, commenters stated that 

occasionally the previous finance or lease source 

will not provide a timely payoff for a traded vehicle 

or will refuse to accept a payoff claiming more 

money is due; or a previous finance or lease source 

may accept a payoff, but will refuse to credit its 

former customer’s account and release the title 

promptly. In addition, an industry association 

commenter requested that the Commission narrow 

this prohibition to specifically address the fact 

patterns giving rise to it that the Commission sets 

forth in the NPRM, and, in so doing recognize that 

it is in a dealer’s business interest to pay off the 

existing loan quickly so that the vehicle can be 

more easily and quickly retailed. 

216See paragraph-by-paragraph analysis of 

§ 463.3(e) in SBP III.C.2(e) (discussing deception 

and reasonable basis). 

217See Individual commenter, Doc. No. FTC– 

2022–0046–7905 at 1. 

218See Comment of State of S.C. Dep’t of 

Consumer Affs., Doc. No. FTC–2022–0046–7891 at 

6. 

219 Individual commenter, Doc. No. FTC–2022– 

0046–2364 (‘‘Many favorable ([i.e.] 5 star) Dealer 

reviews I have read appear suspect with generic, 

similar wording (or no wording at all) seemingly 

provided to offset lower Dealer ([i.e.] 1 star) ratings. 

I recommend that for [§ 463.3(k)] the following (or 

similar) be appended: Additionally, consumer 

reviews may not be created, editorialized, modified 

or removed by any Dealer or third party acting at 

the direction of any Dealer. Consumer reviews 

should be modifiable or removable by the 

originating author.’’). 

remaining on a trade-in vehicle.214

Other commenters, including an 

industry association and dealership 

associations, requested that the 

Commission limit dealer responsibility 

under this provision for unanticipated 

delays stemming from circumstances 

beyond a dealer’s reasonable control, 

arguing that proposed § 463.3(j) made 

no exception for unanticipated delays 

such as a previous financing source 

declining to accept a payoff or refusing 

to release the vehicle title after receiving 

a payoff.215 The Commission notes that, 

as is the case under current law, under 

this provision, dealers are not permitted 

to make claims about whether or when 

they will pay off some or all of the 

financing or lease on a consumer’s 

trade-in vehicle if the truth of those 

claims depends on circumstances 

outside their control and the dealer does 

not possess a reasonable basis for such 

claims.216

An individual commenter contended 

that requiring additional disclosures 

about this provision would confuse the 

consumer.217 This provision, however, 

does not necessitate any affirmative 

disclosures from dealers. Instead, it 

prohibits dealers from misleading 

consumers about whether or when they 

will pay off some or all of the financing 

or lease on a consumer’s trade-in 

vehicle. 

One State consumer protection agency 

commenter requested that the 

Commission require, in situations where 

a buyer’s credit information or trade-in 

vehicle are evidently insufficient to 

support a deal, that the dealer require 

additional down payment or other 

security, or affirmatively disclose that 

the dealer is not responsible for paying 

off liens.218 Without further information 

on the costs and benefits of such a 

proposal, the Commission declines to 

add such requirements to this Final 

Rule. The Commission notes, however, 

that the Rule prohibits dealers from 

misleading consumers regarding when 

trade-in vehicles have negative equity 

and from otherwise failing to obtain the 

consumer’s express, informed consent 

prior to charging the consumer for any 

item, including any amounts associated 

with trading in a vehicle. The 

Commission will continue to monitor 

this area to determine whether any such 

additional measures are warranted to 

protect consumers or competition. 

The Commission also received a 

number of comments from dealership 

associations arguing that existing State 

and Federal laws address dealers’ 

obligations in connection with 

informing consumers how much each 

consumer is responsible for financing. 

The Commission notes that commenters 

presented no actual conflicts between 

this provision and other laws, and to the 

extent duplicative laws prohibit 

misrepresentations in this area, the 

Commission has not observed harmful 

consequences to consumers or 

competition. Further, as noted 

elsewhere in the section-by-section 

analysis, State laws may provide more 

or less specific requirements as long as 

those requirements are not inconsistent 

with part 463, under § 463.9, and in the 

event of an inconsistency, the Rule only 

affects such State law to the extent of 

the inconsistency. 

After carefully considering the 

comments, the Commission is finalizing 

this provision with the two minor 

modifications to conform with the 

defined terms ‘‘ ‘Covered Motor Vehicle’ 

or ‘Vehicle’ ’’ and ‘‘ ‘Covered Motor 

Vehicle Dealer’ or ‘Dealer.’ ’’ This 

provision prohibits dealers from making 

misrepresentations about paying off the 

financing or lease on a trade-in vehicle. 

Such conduct includes misrepresenting 

to consumers who trade in a vehicle that 

the dealer will pay off any outstanding 

balance owed on the trade-in vehicle 

when the consumer purchases a vehicle 

from the dealer. For example, when 

such a dealer takes a trade-in, if the 

dealer remits payment to the entity to 

whom the trade-in payment is owed, as 

consumers would expect, but also adds 

this payment to the amount the 

consumer owes on the vehicle the 

consumer is purchasing from the dealer, 

the consumer is the party that has 

ultimately paid off the trade-in amount, 

contrary to the impression made by the 

dealer. This provision also prohibits 

dealers that are going out of business 

from representing expressly or by 

implication that they will pay off liens 

if they do not, in fact, pay off the liens, 

or do not pay them off in a timely 

manner. Such misrepresentations are 

likely to affect a consumer’s choice to 

visit a particular dealership or select a 

particular vehicle. 

(k) Whether Consumer Reviews or 

Ratings Are Unbiased, Independent, or 

Ordinary Consumer Reviews or Ratings 

of the Dealer or the Dealer’s Products or 

Services 

Proposed § 463.3(k) prohibited 

misrepresentations about whether 

‘‘consumer reviews or ratings are 

unbiased, independent, or ordinary 

consumer reviews or ratings of the 

Dealer or its products or services.’’ 

Upon careful review and consideration 

of the comments, the Commission is 

finalizing paragraph (k) of § 463.3 with 

one technical clarification to replace 

‘‘its’’ with ‘‘the Dealer’s.’’ The Rule’s 

requirements apply to all individuals 

and entities that meet the definition of 

‘‘Dealer.’’ 

An individual commenter 

recommended that the Commission 

modify this provision to include 

language explicitly prohibiting dealers 

from creating, editorializing, modifying, 

or removing consumer reviews.219 Here, 

the Commission notes that if such acts 

or practices would result in reviews that 

are not independent or do not otherwise 

reflect ordinary consumer experience, 

they already would violate this 

provision. For example, if a dealer 

created a positive review, edited or 

modified negative reviews to make them 

sound positive, or removed negative 

reviews while keeping positive reviews, 

such practices would violate this 

provision. 

A few individual commenters 

recommended that the Rule include 

additional provisions related to 

consumer reviews, including a 

requirement for the creation of an online 

database for consumer reviews and 

complaints about dealerships, and a 

requirement for dealers to post 

consumer reviews online and in the 

dealership location. The Commission 

notes that while some reviews are 

available online, additional information 

could assist consumers, and the 

Commission will consider whether such 


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220See, e.g., Fed. Trade Comm’n, Notice of 

Proposed Rulemaking, Trade Regulation Rule on 

the Use of Consumer Reviews and Testimonials, 88 

FR 49364 (July 31, 2023) (to be codified at 16 CFR 

465), https://www.govinfo.gov/content/pkg/FR2023-07-31/pdf/2023-15581.pdf; Fed. Trade 

Comm’n, Guides Concerning Use of Endorsements 

and Testimonials in Advertising, 16 CFR 255; Fed. 

Trade Comm’n, ‘‘FTC’s Endorsement Guides: What 

People are Asking,’’ https://www.ftc.gov/businessguidance/resources/ftcs-endorsement-guides-whatpeople-are-asking; Fed. Trade Comm’n, ‘‘Soliciting 

and Paying for Online Reviews: A Guide for 

Marketers,’’ https://www.ftc.gov/business-guidance/ 

resources/soliciting-paying-online-reviews-guidemarketers; Fed. Trade Comm’n, ‘‘Disclosures 101 

for Social Media Influencers,’’ https://www.ftc.gov/ 

business-guidance/resources/disclosures-101- 

social-media-influencers. 

221See Complaint ¶¶ 73–78, Fed. Trade Comm’n 

v. Universal City Nissan, Inc., No. 2:16-cv-07329 

(C.D. Cal. Sept. 29, 2016); see also Fed. Trade 

Comm’n, Notice of Proposed Rulemaking, Trade 

Regulation Rule on the Use of Consumer Reviews 

and Testimonials, 88 FR 49364, 49371–75 (July 31, 

2023) (to be codified at 16 CFR 465), https://

www.govinfo.gov/content/pkg/FR-2023-07-31/pdf/ 

2023-15581.pdf (discussing such enforcement 

actions). 

222See Complaint ¶¶ 73–78, Fed. Trade Comm’n 

v. Universal City Nissan, Inc., No. 2:16-cv-07329 

(C.D. Cal. Sept. 29, 2016). 

223One commenter conducted a study of Google 

reviews of U.S. car dealerships from April 2008 to 

September 2022. The commenter found by 

examining a 2% sample of these reviews that 

consumers gave on average 4.47 stars out of 5 stars 

and made several other conclusions about 

consumer satisfaction with the auto transaction 

experience based on that methodology. Comment of 

Inst. for Regul. Analysis & Engagement, Doc. No. 

FTC–2022–0046–10164 at 2–5. The Commission 

notes that, consistent with its enforcement 

experience, there is no guarantee that those reviews 

are a genuine reflection of consumer experience. 

Moreover, the Commission notes that oftentimes 

consumers do not realize that they have been 

charged without their authorization. See SBP II.B. 

Thus, such a study that relies on Google star ratings 

is not conclusive of consumer experience. 

224See § 463.1 (‘‘It is an unfair or deceptive act 

or practice within the meaning of section 5(a)(1) of 

the Federal Trade Commission Act (15 U.S.C. 

45(a)(1)) to violate any applicable provision of this 

part, directly or indirectly . . . .’’). 

225See 15 U.S.C. 45b. 

226 Individual commenter, Doc. No. FTC–2022– 

0046–7445 at 17. 

227The Commission discussed government 

impersonation scams in its Notice of Proposed 

Rulemaking for a Trade Regulation Rule on 

Impersonation of Government and Business. See 87 

FR 62741 (Oct. 17, 2022). The Commission 

observed, inter alia, ‘‘ongoing widespread fraud 

measures are needed as it continues to 

monitor the marketplace, including after 

the Rule goes into effect. 

Several dealership associations asked 

what type or format of reviews or ratings 

would be covered by this proposed 

provision. As proposed, § 463.3(k) 

applied to all reviews or ratings, in any 

format or wherever displayed, that are 

likely to mislead consumers as to 

whether such reviews or ratings are 

unbiased, independent, or ordinary 

consumer reviews or ratings. Relatedly, 

industry and dealership associations 

contended that the language used in the 

proposed provision was vague and 

confusing, and requested that the 

Commission further define the phrase, 

‘‘unbiased, independent, or ordinary 

consumer reviews or ratings.’’ To begin, 

the operative terms in this phrase are 

commonly used and understood and 

may be interpreted according to their 

plain meaning without further 

definition. Moreover, the Commission 

has, for decades, provided information 

and guidance on avoiding deception 

through the use of endorsements, 

testimonials, and online reviews.220

Enforcement actions by the Commission 

have documented examples of the types 

of misrepresentations that would be 

covered by this provision.221 For 

example, dealerships and their 

employees have posted positive, fivestar online reviews that falsely purport 

to be objective or independent.222 As 

these sources make clear, a person who 

is unbiased, independent, and an 

ordinary consumer would be someone 

who was not paid or given something of 

value to write a review and who has no 

employment or familial relationship or 

other unexpected material connection to 

the dealership.223

An industry association commenter 

expressed concern that this proposed 

provision did not appear to be limited 

to misrepresentations that may occur 

when a dealership, and not an unrelated 

third party, affirmatively publishes 

consumer reviews. To the extent an 

independent third party that does not 

have a material connection with the 

dealership makes any such claims, those 

claims would not be covered by this 

provision. This provision concerns 

situations where there is such a 

relationship between the third party and 

the dealer. For example, if a dealer were 

to pay a third party or consumer to post 

positive reviews that misrepresent their 

status as unbiased, independent, or 

ordinary consumer reviews, the dealer 

would be violating this provision.224

One industry association commenter 

contended that the Consumer Review 

Fairness Act 225 already prohibits the 

conduct covered by this provision. The 

Consumer Review Fairness Act makes it 

illegal for businesses to have form 

contracts that disallow or restrict 

consumers from posting negative 

reviews. Section 463.3(k) prohibits 

misrepresentations regarding the 

authenticity of consumer reviews 

generally. These provisions are not in 

conflict, and as discussed in SBP III.C.1, 

to the extent the provision creates any 

duplication, the Commission has seen 

no harm to consumers or competition 

from duplicative prohibitions of 

deceptive conduct. 

Whether reviews or ratings about a 

seller or the seller’s products or services 

are from unbiased, independent, or 

ordinary consumers is material to 

consumers’ decision-making because a 

consumer is more likely to interact with 

a particular dealership if the dealership 

has positive reviews or ratings from 

unbiased, independent, or ordinary 

consumers. Thus, after careful review of 

all the comments, the Commission is 

finalizing paragraph (k) of § 463.3 

without substantive modification from 

the Commission’s original proposal. 

(l) Whether the Dealer or Any of the 

Dealer’s Personnel or Products or 

Services Is or Was Affiliated With, 

Endorsed or Approved by, or Otherwise 

Associated With the United States 

Government or Any Federal, State, or 

Local Government Agency, Unit, or 

Department, Including the United States 

Department of Defense or Its Military 

Departments 

Proposed § 463.3(l) prohibited 

misrepresentations that ‘‘the Dealer or 

any of its personnel or products or 

services is or was affiliated with, 

endorsed or approved by, or otherwise 

associated with the United States 

government or any Federal, State, or 

local government agency, unit, or 

department, including the United States 

Department of Defense or its Military 

Departments.’’ Upon careful review and 

consideration of the comments, the 

Commission is finalizing paragraph (l) 

of § 463.3 with one technical 

clarification to replace ‘‘its’’ with ‘‘the 

Dealer’s.’’ The Rule’s requirements 

apply to all individuals and entities that 

meet the definition of ‘‘Dealer.’’ 

One individual commenter 

recommended that the Commission 

additionally prohibit dealers from 

‘‘causing any person to impersonate a 

police officer for any purpose.’’ 226 The 

commenter contended that such a 

prohibition would address a common 

yo-yo financing tactic, wherein dealers 

exert pressure on consumers to return 

vehicles by calling the consumers on the 

phone, falsely claiming to be police 

officers, and falsely representing that 

there is a warrant for the consumers’ 

arrest or that the dealer has reported the 

consumers’ vehicles as stolen. The 

Commission is likewise concerned 

about such conduct, and notes that it 

would be covered by the language in 

this paragraph, which applies broadly to 

misrepresentations of affiliation with, 

endorsement or approval by, or 

association with ‘‘any Federal, State, or 

local government agency, unit, or 

department,’’ including State or local 

police officials.227 By misrepresenting 


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schemes in which scammers impersonate law 

enforcement or government officials in attempts to 

extort money or steal personally identifiable 

information.’’ See id. at 62742 (citing 

announcements on March 7, 2022, and May 20, 

2022, by the Federal Bureau of Investigation and the 

Social Security Administration’s Office of the 

Inspector General, in coordination with other 

Federal law enforcement agencies, respectively). 

228One commenter further opined that ‘‘the 

Department of Defense has itself dealt with this 

situation in the case of military lending and sales.’’ 

Comment of Kan. Auto. Dealers Ass’n, Doc. No. 

FTC–2022–0046–4510 at 7. 

229Comment of N.C. Auto. Dealers Ass’n, Doc. 

No. FTC–2022–0046–11223 at 9. 

230See, e.g., Complaint ¶¶ 5–6, 9–11, 14, Traffic 

Jam Events, LLC, No. 9395 (F.T.C. Aug. 7, 2020) 

(alleging auto marketer misrepresented that it 

provided COVID–19 stimulus relief to consumers); 

Complaint ¶¶ 14–26, Fed. Trade Comm’n v. Ponte 

Invs., LLC, No. 1:20–cv–00177 (D.R.I. Apr. 17, 2020) 

(alleging misrepresentation of government 

affiliation by company that impersonated the U.S. 

Small Business Administration with business 

names ‘‘SBA Loan Program’’ and ‘‘SBA Loan 

Program.com’’ and claimed to help businesses 

obtain access to coronavirus relief programs 

administered by the agency); Complaint ¶¶ 24–36, 

Fed. Trade Comm’n v. DOTAuthority.com, Inc., No. 

0:16–cv–62186 (S.D. Fla. Sept. 13, 2016) (alleging 

defendants misrepresented affiliation with U.S. 

Department of Transportation by claiming to be the 

‘‘Compliance Unit’’ of ‘‘DOTAuthority’’ and 

providing a telephone number with a Washington, 

DC area code). 

231See, e.g., Fed. Trade Comm’n, ‘‘The Road 

Ahead: Selling, Financing, & Leasing Motor 

Vehicles,’’ Public Roundtable, Panel 1: Military 

Consumers and the Auto Sales and Financing 

Process, Remarks by Hollister K. ‘‘Holly’’ Petraeus, 

Dir., Off. of Servicemember Affs., CFPB, Tr. at 11 

(Aug. 2, 2011), https://www.ftc.gov/system/files/ 

documents/public_events/52654/080211_ftc_

sess1.pdf (‘‘[S]ervicemembers don’t always realize if 

they buy and finance a car here in the U.S., they 

can’t take it out of the country unless they have a 

letter of permission from the lienholder to do so. 

And some of the lienholders won’t give that 

permission. . . . [W]e [heard from] a JAG in 

Germany saying, ‘I see a number of people who end 

Continued 

police involvement in potential vehicle 

repossession, such conduct would also 

violate paragraph (o) of § 463.3 of the 

Final Rule. 

A number of dealership association 

commenters contended that some States 

address this type of deception.228 As 

noted in response to similar commenter 

contentions regarding other proposed 

provisions, the Commission has seen no 

harm to consumers or competition from 

duplicative misrepresentation 

prohibitions, and overlap between the 

Commission’s Rule provisions and 

existing law is indicative of dealers’ 

ability to comply with these provisions. 

Moreover, including such a provision in 

the Final Rule additionally benefits 

consumers who encounter such 

conduct, and aids law-abiding dealers 

that otherwise lose business to 

competitors that act unlawfully. 

Further, § 463.9 discusses part 463’s 

relation to State laws. 

A dealership association commenter 

claimed that many dealerships in the 

commenter’s State work with military 

personnel to promote charitable causes, 

and questioned whether a banner listing 

a dealership at a charitable military 

event would be considered a 

misrepresentation that the dealership is 

‘‘associated’’ with the military.229 Here, 

the Commission notes that a banner that 

conveys true participation in a 

charitable military event, and does not 

deceptively represent an affiliation 

with, endorsement or approval by, or 

association with the military, would not 

violate this provision. The 

Commission’s law enforcement practice 

provides further guidance on this point: 

the Commission’s many enforcement 

actions alleging misrepresentation of 

government affiliation provide examples 

of the types of conduct that would 

violate this provision.230

Representations about whether a 

seller or any of its personnel, products, 

or services is or was affiliated with, 

endorsed or approved by, or otherwise 

associated with the government are 

likely to affect consumers’ conduct. 

Consumers are more likely to visit a 

dealership and select a vehicle or 

product if they believe that a specific 

dealer or a dealer’s personnel, products, 

or services have been approved by a 

government entity. The Commission 

thus adopts paragraph (l) of § 463.3 

without substantive modification from 

the Commission’s original proposal. 

(m) Whether Consumers Have Won a 

Prize or Sweepstakes 

Proposed § 463.3(m) prohibited 

misrepresentations about whether 

consumers have won a prize or 

sweepstakes. Upon careful review and 

consideration of the comments, the 

Commission is finalizing paragraph (m) 

of § 463.3 without modification from its 

original proposal. 

Comments from dealership 

associations contended that some States 

or municipalities address this type of 

deception. As discussed in SBP III.C.1, 

the Commission has not seen harm to 

consumers or competition from multiple 

prohibitions against misrepresentations. 

Furthermore, any significant overlap 

between the Commission’s Rule 

provisions and existing law is indicative 

of dealers’ ability to comply with these 

provisions. Finally, § 463.9 discusses 

part 463’s relation to State laws. 

Misrepresentations about whether 

consumers have won a prize or 

sweepstakes harm consumers by 

inducing consumers to choose and 

transact with a particular dealership 

under false pretenses. Thus, the 

Commission adopts paragraph (m) of 

§ 463.3 without modification from the 

Commission’s original proposal. 

(n) Whether, or Under What 

Circumstances, a Vehicle May Be 

Moved, Including Across State Lines or 

Out of the Country 

Proposed § 463.3(n) prohibited 

misrepresentations regarding whether, 

or under what circumstances, a vehicle 

may be moved, including across State 

lines or out of the country. Upon careful 

review and consideration of the 

comments, the Commission is finalizing 

paragraph (n) of § 463.3 largely as 

proposed, with the minor modification 

of capitalizing the word ‘‘State,’’ as well 

as the defined term ‘‘Vehicle’’ to 

conform with the revised definition at 

§ 463.2(e). 

The Commission received comments 

including from dealership associations 

arguing that proposed § 463.3(n) would 

pose issues for dealers who must 

comply with limitations imposed by 

manufacturers or distributors on the 

export of new motor vehicles. These 

commenters requested clarification 

about liability under this provision in 

the event dealers communicate any such 

export limitations to consumers or take 

other steps to prevent the export of new 

vehicles. Section 463.3(n), however, 

does not prohibit dealers from 

accurately and non-deceptively 

communicating whether, or under what 

circumstances, a vehicle may be 

moved—it instead prohibits 

representations that mislead consumers 

about this information. 

Commenters including a dealership 

association objected to this proposed 

provision by asserting that a State or 

insurance company may prescribe, and 

the parties to a contract may agree upon, 

whether a leased or purchased vehicle 

may be driven to a particular area. This 

provision, however, does not prevent 

parties from discussing and agreeing to 

whether a vehicle may be moved. 

Instead, § 463.3(n) prohibits 

misrepresentations about whether, or 

under what circumstances, a vehicle 

may be moved, including regarding any 

liens or other restrictions that would 

prevent or hinder consumers’ ability to 

move the vehicle beyond certain 

boundaries. Furthermore, interaction 

with State laws is explained in the 

section-by-section analysis of § 463.9. 

Representations about whether, and 

under what circumstances, a consumer 

may move a vehicle are material as they 

are likely to affect a reasonable 

consumer’s decision to purchase a 

vehicle, including decisions of military 

consumers who may frequently need to 

move.231


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up having to do what you would call ‘‘voluntary 

repossession’’ on their car because they bought this 

car, they’re excited about it, and . . . the person 

who made them the loan didn’t say ‘‘Oh, by the 

way, if you go overseas, we’re not gonna let you 

take it with you.’’’ And . . . sometimes, they’ll find 

that their warranty is no good overseas, either.’’). 

232Comment of 18 State Att’ys Gen., Doc. No. 

FTC–2022–0046–8062 at 13. 

233See, e.g., Complaint ¶¶ 10–21, CFPB v. USASF 

Servicing, LLC, No. 1:23-cv-03433–VCM (N.D. Ga. 

Aug. 2, 2023); Consumer Fin. Prot. Bureau, 

‘‘Supervisory Highlights: Issue 28, Fall 2022’’ 6–7 

(Nov. 2022), https://files.consumerfinance.gov/f/ 

documents/cfpb_supervisory-highlights_issue-28_

2022-11.pdf (finding that, in certain instances, auto 

servicers engaged in unfair acts or practices by 

activating vehicle disabling devices in consumers’ 

vehicles when consumers were not past due on 

payment, contrary to relevant contracts and 

disclosures, including by causing the devices to 

sound late payment warning beeps and by 

preventing consumers from starting their vehicles). 

234See 15 U.S.C. 45; see also, e.g., Int’l Harvester 

Co., 104 F.T.C. 949, 1064–67 (1984) (finding that 

manufacturer’s failure to adequately disclose that 

its tractors had a serious safety hazard constituted 

unfair conduct, where the hazard caused serious 

injury to a small number of consumers, consumers 

could not have reasonably avoided the harm 

because the respondent did not adequately disclose 

the serious risk, and the cost of the respondent 

disclosing the risk was very small in relation to the 

substantial injury). 

235See 50 U.S.C. 3952(a). 236NPRM at 42022. 

Based on a review of the comments 

and for the reasons previously 

discussed, the Commission is finalizing 

paragraph (n) of § 463.3 largely as 

proposed, with the minor modification 

of capitalizing ‘‘State’’ and the defined 

term ‘‘Vehicle.’’ 

(o) Whether, or Under What 

Circumstances, a Vehicle May Be 

Repossessed 

Proposed § 463.3(o) prohibited 

misrepresentations regarding whether, 

or under what circumstances, a vehicle 

may be repossessed. After careful 

review and consideration of the 

comments, the Commission is finalizing 

paragraph (o) of § 463.3 with the minor 

modification of capitalizing the defined 

term ‘‘Vehicle’’ to conform with the 

revised definition at § 463.2(e). 

A number of commenters, including 

consumer advocacy organizations and a 

group of State attorneys general, 

expressed concern about electronic 

disablement of vehicles, including 

through the use of starter interrupt 

devices, which are sometimes utilized 

for vehicle repossession. Many of these 

commenters expressed concern about 

the potential for harm to consumers if 

such devices are activated without 

regard to the location or operational 

state of the vehicle, and recommended 

that the Commission restrict their use. 

Alternatively, one such commenter 

recommended that the Commission add 

a provision to part 463 that would 

require dealers to disclose any such 

technology, obtain the consumer’s 

express, informed consent to its use, 

and limit its use to one time, not to 

exceed 30 days, once a consumer is in 

default. Finally, the comment from a 

group of State attorneys general 

recommended that the Commission 

require additional disclosures any time 

a starter interrupt device is installed, 

provide advance notice to consumers 

prior to activating such devices, and 

enable consumers to restart their 

vehicles in emergency or unsafe 

situations.232

The Commission recognizes the 

potential for abuse with regard to 

vehicle disablement technology.233 It is 

already illegal under section 5 of the 

FTC Act to engage in deception, 

including regarding vehicle disablement 

technology, and to unfairly cause 

substantial injury to consumers, such as 

by disabling a vehicle while it is being 

operated on the highway.234 This 

provision will further provide 

protection for consumers from unfair or 

deceptive conduct surrounding the 

repossession of vehicles. Moving 

forward, the Commission will continue 

to monitor the motor vehicle 

marketplace for developments in this 

area to determine whether additional 

restrictions are warranted. 

A number of dealership association 

commenters contended that this 

provision would inhibit dealers from 

making representations about their 

lawful rights to repossess vehicles, 

positing that, upon making any such 

representations, this provision might 

require dealers to carry out 

repossessions without exception or risk 

violating this provision. This provision, 

however, does not prevent dealers from 

providing accurate information to 

consumers about when a vehicle can, or 

will, be repossessed. Even where dealers 

have a lawful right to repossess a 

vehicle, current law, as well as this 

provision, prohibit dealers from 

misrepresenting whether or when they 

may take such action. Current law, 

including at the Federal level, imposes 

some such restrictions in this regard: for 

example, the Servicemembers Civil 

Relief Act prohibits repossession of 

vehicles during a servicemember’s 

period of military service without a 

court order, as long as the 

servicemember either placed a deposit 

for the vehicle or made at least one 

installment payment on the contract 

before entering military service.235 This 

provision prevents dealers from 

representing that they may repossess 

military consumers’ vehicles under such 

circumstances. However, dealers may 

still accurately and non-deceptively 

inform a consumer about the 

circumstances under which a vehicle 

can be repossessed or when the dealer 

may take action. In providing 

consumers with such information, 

however, dealers must refrain from 

representing, including by implication, 

that repossession is likely when in truth 

it is not. 

After considering the comments, the 

Commission is finalizing paragraph (o) 

of § 463.3 largely as proposed, with the 

minor modification of capitalizing the 

defined term ‘‘Vehicle.’’ This provision 

prohibits dealers from making 

misrepresentations regarding material 

information about repossession of a 

vehicle. Information about whether, or 

under what circumstances, a vehicle 

may be repossessed is likely to affect 

consumers’ conduct, including by 

impacting military consumers’ conduct 

regarding which payments to prioritize 

while serving our country. 

(p) Any of the Required Disclosures 

Identified in This Part 

Proposed § 463.3(p) prohibited 

misrepresentations of any of the 

required disclosures identified in this 

part. As the Commission noted in its 

NPRM, this was including but not 

limited to representations that limit or 

contradict the required disclosures.236

Upon careful review and consideration 

of the comments, the Commission is 

finalizing paragraph (p) of § 463.3 as 

proposed. 

The Commission received a 

dealership association comment that 

contended generally that the proposed 

prohibited misrepresentations in this 

provision were already addressed in 

State statutes and regulations, and 

asserted that such State measures 

should suffice given that, according to 

the commenter, State regulators are 

more readily available to the public. As 

discussed in SBP III.C.1, the 

Commission has seen no harm to 

consumers or competition from 

duplicative prohibitions of deceptive 

conduct, and commenters did not cite 

State laws that permit 

misrepresentations or otherwise present 

a possible conflict with the Rule. 

Moreover, the Final Rule provides 

additional remedies that will benefit 

consumers who encounter conduct that 

is already illegal under State or Federal 

law, including by adding a mechanism 

for the Commission to redress 

consumers injured by a dealer’s 

violation of the rule, and will assist lawabiding dealers that presently lose 

business to competitors that act 

unlawfully. Furthermore, State laws 


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237See 15 U.S.C. 57a(a)(1)(B) (the Commission 

‘‘may include requirements prescribed for the 

purpose of preventing’’ such unfair or deceptive 

acts or practices). 

238 15 U.S.C. 45. 

239Comment of Or. Consumer Just., Doc. No. 

FTC–2022–0046–8492 at 4; cf. Individual 

commenter, Doc. No. FTC–2022–0046–0144 

(recommending the disclosed offering price 

separately list MSRP, markup, all fees, and add-on 

costs); Comment of Legal Aid Just. Ctr., Doc. No. 

FTC–2022–0046–7833 at 2 (‘‘[D]ealers should be 

required to verbally disclose and explain in a 

language the customer understands the material 

terms of the contact [sic] (including APR, total 

number of monthly payments required, etc.) before 

customers sign[] the contract and receive the 

customers’ consent that they understand these 

terms. After this verbal disclosure, a consent form 

should be required. This form should be provided 

in the language preferred by the customer, and 

should ensure that the customer was provided with 

accurate and agreed-upon terms prior to signing.’’); 

Individual commenter, Doc. No. FTC–2022–0046– 

1641 (‘‘Mortgage lenders are required to give a 

borrower a disclosure document prior to closing to 

show all costs and expenses; car dealers should 

have to do the same thing.’’). 

240 In addition to the disclosures noted, a few 

commenters requested additional provisions to 

address concerns regarding transparency in pricing, 

Continued 

may provide more or less specific 

requirements, as long as those 

requirements are not inconsistent with 

part 463, and in the event of an 

inconsistency, the Rule only affects 

such State law to the extent of the 

inconsistency. Accordingly, the 

Commission adopts this provision 

without modification from its original 

proposal. 

The Commission hereby determines it 

is an unfair or deceptive act in violation 

of the FTC Act for any dealer to make 

any misrepresentations, expressly or by 

implication, regarding material 

information about the subjects set forth 

in the paragraphs of § 463.3. Such 

misrepresentations are likely to cause 

consumers to waste significant time or 

money beyond what dealers led them to 

believe would be necessary to purchase 

or lease a vehicle. Thus, these 

misrepresentations are material and are 

likely to cause substantial injury to 

consumers. This injury is not reasonably 

avoidable by consumers themselves 

because information about the truth or 

falsity of the dealer’s misrepresentations 

is within the control of the dealer, and 

there are no countervailing benefits to 

consumers or to competition from the 

illegal practice of making 

misrepresentations. Further, these 

provisions also serve to help prevent 

dealers from failing to make disclosures 

required by § 463.4, and from charging 

for add-ons that provide no benefit and 

from failing to obtain express, informed 

consent for charges, as required by 

§ 463.5, including by prohibiting 

misrepresentations regarding costs and 

terms.237 To reflect this, and without 

changing any substantive requirements 

for covered entities, the Commission is 

adding the following sentence to the 

end of § 463.3, at newly designated 

paragraph (q): ‘‘The requirements in this 

section also are prescribed for the 

purpose of preventing the unfair or 

deceptive acts or practices defined in 

this part, including those in §§ 463.4 

and 463.5.’’ Thus, this Rule requires 

dealers to refrain from making material 

misrepresentations about the topics 

enumerated in § 463.3. The prohibitions 

contained in § 463.3 help protect 

consumers from deceptive 

representations and promote the ability 

of honest dealers to compete on honest 

terms. 

D. § 463.4: Disclosure Requirements 

1. Overview 

The proposed rule included five 

disclosure requirements for motor 

vehicle dealers regarding certain pricing 

and financing information (in proposed 

§ 463.4(a) through (e)). These provisions 

proposed to require dealers to disclose 

a vehicle’s offering price; an add-on list 

with each optional add-on for which the 

dealer charges consumers and the price 

of each such add-on; that such add-ons 

are not required and that the consumer 

can purchase or lease a vehicle without 

the add-ons; and information about a 

vehicle’s total of payments when 

making certain representations about 

monthly payments. 

In its NPRM, the Commission 

specifically requested comments 

regarding key aspects of the proposed 

disclosures. In response, various 

stakeholder groups and individuals 

provided comments regarding the 

proposed provisions. In this section, the 

Commission discusses the comments, 

responses to the comments, and any 

changes made to this section based on 

the comments. 

The Commission received many 

comments in favor of its proposal, 

including from consumer groups, 

financial services groups, dealerships 

and dealership employees, individual 

consumers, and others. These comments 

supported the proposed disclosures as 

addressing bad actors and unlawful 

practices in the automotive marketplace 

while promoting transparency, reducing 

consumer confusion, and refraining 

from inhibiting consumer choice or 

materially increasing the time or 

paperwork required. 

A number of such comments, 

however, urged the Commission to 

adopt additional disclosures, both in the 

areas covered by its proposal and 

elsewhere. Regarding disclosures 

covered in the proposal, for example, 

commenters suggested more detailed 

requirements, including regarding 

specific disclosure language and 

specific placement of disclosures. The 

Commission agrees with commenters 

that key information affecting pricing, 

add-ons, and costs must be disclosed 

clearly and conspicuously to consumers 

in order to address consumer deception 

and unauthorized charges during the 

motor vehicle buying and leasing 

process. To provide flexibility for 

dealers and room for disclosures to be 

made in a manner that is clear and 

conspicuous to consumers in particular 

circumstances, however, the 

Commission declines to include 

additional prescriptive language about 

the form of such disclosures. Further, 

the Commission emphasizes that, in 

accordance with the provision being 

finalized at § 463.3(p), any material 

misrepresentations regarding the 

disclosures in the Final Rule violate 

section 5 of the FTC Act 238 and part 

463. 

The additional disclosures 

recommended by commenters included, 

inter alia: a disclosure regarding the 

installation and use of any electronic 

disabling devices; a disclosure 

explaining the fees certain lenders may 

charge to accept a consumer’s loan 

application; a disclosure of the invoice 

price, or the price a dealer paid the 

manufacturer for the vehicle; a 

disclosure of any potential value gap 

between a vehicle’s price and its 

appraised value; a disclosure, prior to 

purchase negotiations, of any potential 

financing limitations imposed by the 

dealer; a disclosure of credit 

characteristics relied upon by the dealer 

and certain terms; a disclosure that, as 

with a mortgage loan settlement 

statement, itemizes all the elements of 

the sale for car purchases; 239 and 

disclosure signage in dealership 

showrooms or on sales desks explaining 

that add-ons are not required. As for 

disclosures in additional areas, the 

Commission recognizes that vehicle 

purchase and lease transactions are 

lengthy and document-heavy, and while 

consumers may benefit from additional 

information, each additional disclosure 

requirement could increase the cost to 

comply with part 463 and would risk 

crowding out the information in the 

Commission’s proposed disclosures. 

Accordingly, the Commission has 

determined not to expand § 463.4 of this 

Final Rule to include additional 

disclosures.240 The Commission will 


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including related to interest rates, and that the Rule 

require dealers to maintain a fiduciary relationship 

to customers. The Commission recognizes the 

concerns regarding pricing transparency and 

deceptive conduct related to pricing, and will 

continue to monitor such issues, including after this 

provision (§ 463.4(a), offering price disclosure) and 

the misrepresentation provisions (§ 463.3) are in 

effect. 

241Comment of Nat’l Auto. Dealers Ass’n, Doc. 

No. FTC–2022–0046–8368 at 104, 122; Comment of 

Ohio Auto. Dealers Ass’n, Doc. No. FTC–2022– 

0046–6657 at 6, 9; see Comment of Compliance 

Sys., Doc. No. FTC–2022–0046–7836 at 1. 

242Each year since FY2002, the Small Business 

Administration’s Office of the National 

Ombudsman has rated the Federal Trade 

Commission an ‘‘A’’ on its small business 

compliance assistance work. See U.S. Small Bus. 

Admin., ‘‘National Ombudsman’s Annual Reports 

to Congress,’’ https://www.sba.gov/document/ 

report—national-ombudsmans-annual-reportscongress (providing reports from FY2013–FY2020); 

Letter from Edith Ramirez, Chairwoman, Fed. Trade 

Comm’n, to Senator David Vitter, Chairman, Comm. 

on Small Bus. and Entrepreneurship at 1 (Nov. 16, 

2015), https://www.ftc.gov/system/files/documents/ 

reports/federal-trade-commission-rule-complianceguides-small-businesses-other-small-entitiescommission/eighth_section_212_report_to_

congress_july_2014-june_2015.pdf (citing 

Commission’s ‘‘A’’ rating for ‘‘Compliance 

Assistance’’ by the Nat’l Ombudsman from 

FY2002–FY–2014). 

continue to monitor the marketplace to 

evaluate the efficacy and sufficiency of 

the present disclosures. 

In addition, the Commission received 

a number of comments requesting that 

it publish forms for the disclosures 

proposed in this section. These 

comments requested either that the use 

of such forms be required or that the 

Commission provide a ‘‘safe harbor’’ 

from liability under part 463 for 

dealerships that utilize them.241 The 

Commission did not receive, in the 

course of public comment, evidence 

sufficient to conclude that uniform 

formatting for the delivery of such 

disclosures would be necessary to make 

them effective. Nor has the Commission 

received evidence to establish that 

mandating use of a particular form 

disclosure would obviate deceptive and 

unfair conduct in all circumstances. For 

example, forms that were required or 

that provided a ‘‘safe harbor’’ from 

liability could be presented (1) with 

other elements that are distracting or 

confusing, (2) with information that 

modifies or contradicts the form 

disclosures, (3) with instructions, 

discouragement, or time pressure that 

causes consumers not to review the 

forms or that makes such review 

impracticable or impossible, or (4) 

through the use of forms that are precompleted in whole or in part, to the 

extent this makes the information 

therein easy for consumers to miss. The 

end result of such an approach would 

be to enable deception while also 

making such deception more difficult to 

detect. Accordingly, the Commission 

declines to mandate particular 

disclosure forms as a requirement across 

all transactions or to shield against 

liability even where dealers otherwise 

engage in deceptive or unfair conduct. 

The Commission also notes that, 

because it is not mandating particular 

disclosure forms, dealers that are 

already complying with the law will 

avoid additional compliance costs 

associated with using a new form, and 

all dealers will have the flexibility to 

convey the disclosures in a manner that 

is clear and conspicuous under the 

particular circumstances of their 

transactions. 

The Commission also received 

comments that expressed opposition to 

this section. Some individual 

commenters argued that the required 

disclosures were unduly extensive, 

prescriptive or untested, or that the 

substance of these disclosures is already 

conveyed to consumers before the 

consummation of the transaction. In 

response, the Commission stresses that 

this section is limited in both its scope 

and its requirements. Each of the 

disclosures in § 463.4 is focused on one 

key category of information: vehicle 

price, add-on optionality, or total of 

payments. This section requires the 

clear and conspicuous disclosure of this 

information but does not include 

prescriptive requirements. So, for 

example, a written disclosure would 

have to be in a size that stands out, but 

a specific font or font size is not 

mandated, nor are the specific terms or 

format used, nor are any particular uses 

of capitalization, punctuation, ink color, 

or paper color or size. The proposal 

refrained from additional formal 

mandates in order to provide dealers 

with flexibility, within the bounds of 

the law, to provide this essential 

information, including so that dealers 

already conveying this information in a 

non-deceptive manner may continue to 

do so. Accordingly, the Commission 

also finds that testing of these 

requirements is unnecessary. 

Furthermore, each of the disclosure 

requirements being finalized addresses 

the unfair or deceptive act or practice of 

withholding essential information from 

consumers or presenting such 

information to them in a deceptive 

manner. After reviewing comments, 

including those that contended the 

proposal was not prescriptive enough, 

the Commission concludes that this is 

the correct approach, and as such, has 

determined not to adopt any additional 

specifications dictating the form or 

manner in which the disclosures must 

be presented to consumers. Here, as 

elsewhere, the Commission will 

continue its long track record of 

working to assist with legal 

compliance.242 Further, for dealers 

already conveying this information 

clearly and conspicuously, complying 

with this provision should not be 

burdensome. 

Other commenters, including an 

industry association, contended that 

these disclosures would have the effect 

of limiting the products and services 

consumers are offered or otherwise 

restrict lawful sales practices. In 

response, the Commission reiterates that 

this section focuses on one of the most 

foundational pieces of information 

regarding the sale of vehicles, add-ons, 

and financing: their cost. Dealers 

already providing this information in a 

non-deceptive manner will need to 

make minimal, if any, changes to their 

disclosure practices. The Commission 

has seen no evidence that disclosing 

cost information has caused dealers to 

cease offering products. 

Some commenters, including 

dealership associations, contended that 

the presence of some State standards in 

this area makes Federal regulation 

unnecessary or contradictory. In 

response, the Commission notes that it 

drew from several State statutory and 

regulatory provisions in formulating its 

proposal, and it observes that the 

existence and functioning of such 

standards demonstrates the 

practicability of such disclosure 

measures. Dealers can comply with any 

State laws requiring the same conduct 

as well as this section. Similarly, to the 

extent a State requires additional 

disclosures regarding vehicle price, addons, or total of payments, nothing 

prevents dealers from providing those 

disclosures as well as those required 

under § 463.4 so long as the State 

disclosures are not inconsistent with 

part 463. To the extent there is truly a 

conflict between this section and State 

law, § 463.9 provides that part 463 will 

govern, but only to the extent of the 

inconsistency, and only if the State 

statute, regulation, order, or 

interpretation affords consumers less 

protection than does the corresponding 

provision of part 463. Moreover, a 

number of States do not have existing 

standards in the areas covered by this 

part; in such States, the Commission’s 

disclosures will operate as a key 

safeguard. 

Other commenters, including an 

industry association, argued that 

requiring disclosures would increase the 

time and paperwork for consumers to 


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243See § 463.4(a) (stating that Offering Price must 

be disclosed in writing if the communication with 

the consumer, or the dealer’s response, is in 

writing); § 463.4(c), (d), (e) (requiring that 

disclosures be in writing if the dealer’s associated 

representation is in writing). 

244 Milavetz, Gallop & Milavetz, P.A. v. United 

States, 559 U.S. 229, 249 (2010) (emphasis original). 

245Zauderer v. Off. of Disciplinary Couns., 471 

U.S. 626, 651 (1985). 

246 Id. at 652. 

247 Id. at 652–53. 

248 Id. at 651. 

249See id. at 651. 

250Zauderer v. Off. of Disciplinary Couns., 471 

U.S. 626, 651 (1985) (emphasis original). 

251Ass’n of Priv. Sector Colls. & Univs. v. 

Duncan, 110 F. Supp. 3d 176, 199 (D.D.C. 2015), 

aff’d, 640 F. App’x 5 (D.C. Cir. 2016). 

252Spirit Airlines, Inc. v. U.S. Dep’t of Transp., 

687 F.3d 403, 412–15 (D.C. Cir. 2012) (internal 

brackets omitted). 

253Am. Hosp. Ass’n v. Azar, 983 F.3d 528, 540 

(D.C. Cir. 2020) (quoting Zauderer v. Off. of 

Disciplinary Couns., 471 U.S. 626, 650–651 (1985)). 

254Further, as explained in the paragraph-byparagraph analysis of § 463.4 in SBP III.D.2, the 

failure to disclose this information is itself a 

deceptive or unfair practice. 

255 Milavetz, Gallop & Milavetz, P.A. v. United 

States, 559 U.S. 229, 249 (2010). 

256The commenter attributes the intermediate 

scrutiny test to Pagan v. Fruchey, 492 F.3d 766, 771 

(6th Cir. 2007), though it was in fact formulated by 

the Supreme Court in Central Hudson. 

257 Milavetz, Gallop & Milavetz, P.A. v. United 

States, 559 U.S. 229, 249 (2010). 

buy or lease a vehicle. In response, the 

Commission notes that the section 

includes requirements for the disclosure 

of salient, material information early in 

the process, thus eliminating the time 

consumers would otherwise spend 

pursuing misleading offers—time which 

can then be spent pursuing truthful 

offers in the absence of deception. These 

measures will further allow consumers 

to compare dealerships in advance 

based on truthful terms; thus, 

dealerships will earn business based on 

the actual terms offered, and not lose 

business to dealers who compete by 

omitting or hiding actual terms. 

Moreover, the disclosures required by 

this section are limited to key 

information affecting pricing, add-ons, 

and total of payments, needed to 

address consumer deception and 

unauthorized charges during the 

vehicle-buying and leasing process, and 

are required to be in writing only where 

the dealer is responding to written 

consumer communications or already 

providing consumers with 

representations in writing.243 As 

explained in detail in the paragraph-byparagraph analysis of § 463.4(e) in SBP 

III.D.2(e), in order to avoid any 

additional written disclosure 

requirements, the Commission is 

declining to mandate that its required 

disclosures be made in writing in every 

instance. 

An industry association commenter 

argued that the proposed disclosure 

requirements in § 463.4 of the NPRM 

violate the First Amendment. This 

commenter contended that the proposed 

disclosures constituted compelled 

speech; that they would be subject to 

intermediate judicial scrutiny were they 

to be challenged in court; and that, in 

the event of such a challenge, the 

Commission’s actions would fail to 

satisfy that standard of scrutiny, or a 

less stringent one. 

The Commission first addresses the 

applicable First Amendment standard of 

review for this rulemaking effort in the 

event of a judicial challenge. If so 

challenged, the disclosures in § 463.4 

would not be subject to intermediate 

judicial scrutiny, but instead to the less 

rigorous review standard set forth in 

Zauderer v. Office of Disciplinary 

Counsel, 471 U.S. 626, 651 (1985). 

When, as is the case here, a regulation 

‘‘impose[s] a disclosure requirement 

rather than an affirmative limitation on 

speech,’’ and is ‘‘directed at misleading 

commercial speech,’’ Zauderer 

governs.244

Under that standard, a commercial 

speaker’s rights ‘‘are adequately 

protected as long as disclosure 

requirements are reasonably related to 

the State’s interest in preventing 

deception of consumers.’’ 245 In 

Zauderer, the Court upheld a rule 

requiring attorneys who advertised on a 

contingency-fee basis to disclose that 

clients who did not prevail in litigation 

might nevertheless be liable for 

significant costs.246 The Court found 

that ‘‘the possibility of deception is [] 

self-evident’’ when an advertisement 

discloses only one type of charge (fees) 

without mentioning another (costs).247

In upholding the challenged rule as 

reasonable, the Court emphasized that 

the rule merely mandated disclosure of 

‘‘purely factual and uncontroversial 

information about the terms under 

which . . . services will be available,’’ 

and that the ‘‘constitutionally protected 

interest in not providing [such] 

information . . . is minimal.’’ 248

As in Zauderer, § 463.4 requires only 

‘‘purely factual and uncontroversial 

information about the terms under 

which [commercial goods or services] 

will be available.’’ 249 These material 

facts include the offering price of the 

motor vehicle; that add-on products or 

services are not required and the 

consumer can purchase or lease the 

vehicle without the add-on, if true; the 

total amount the consumer will pay to 

purchase or lease the vehicle and, if that 

amount assumes the consumer will 

provide consideration, the amount of 

such consideration; and when a lower 

monthly payment will increase the total 

amount the consumer will pay to 

purchase or lease the vehicle. As in 

Zauderer, any ‘‘constitutionally 

protected interest’’ a motor vehicle 

dealer might have ‘‘in not providing 

[this] factual information . . . is 

minimal.’’ 250

Courts applying Zauderer have 

repeatedly affirmed the constitutionality 

of regulations requiring disclosures of 

complete information about the cost of 

a purchase, which are similar to the 

required disclosures in § 463.4. For 

example, courts upheld a regulation 

requiring schools to ‘‘disclose the ‘total 

cost’ of . . . tuition, fees, books, and 

supplies for its programs,’’ finding that 

this information was ‘‘purely factual 

and uncontroversial.’’ 251 In another 

instance, a court upheld under Zauderer 

a rule requiring airlines to prominently 

disclose the ‘‘total, final price’’ of 

airfare, finding it was ‘‘reasonably 

related to the government’s interest in 

preventing deception of consumers.’’ 252

In yet another case, a court upheld a 

rule requiring hospitals to disclose their 

rates to consumers, finding they were 

‘‘ ‘factual and uncontroversial’ and 

directly relevant to ‘the terms under 

which [hospitals’] services will be 

available’ to consumers.’’ 253 The 

disclosure provisions the Commission is 

finalizing in § 463.4, like the provisions 

upheld in these cases, merely require 

factual and uncontroversial disclosures 

to provide consumers with accurate and 

timely pricing and financing 

information as they consider motor 

vehicle purchases and leases.254

As discussed, Zauderer applies here 

because § 463.4 would ‘‘impose a 

disclosure requirement rather than an 

affirmative limitation on speech.’’ 255

The Commission notes, however, that 

disclosure requirements in § 463.4 

likewise would pass muster even if, as 

the commenter suggested, they were 

evaluated under the intermediate 

scrutiny standard formulated in Central 

Hudson Gas & Electric Corp. v. Public 

Service Commission of New York, 447 

U.S. 557 (1980), and subsequent cases 

applying that standard.256 As an initial 

matter, Central Hudson applies not to 

disclosure requirements, such as those 

the commenter challenges, but to 

affirmative limitations on speech.257

The Central Hudson test requires 

restrictions on lawful, non-misleading 

speech to satisfy three remaining 

criteria. First, there must be a 

substantial governmental interest in the 

restriction; second, the restriction must 

directly advance that interest; and third, 

the restriction may not be more 


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628 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

258See Cent. Hudson Gas & Elec. Corp. v. Pub. 

Serv. Comm’n of N.Y., 447 U.S. 557, 566 (1980). 

Although the Supreme Court in Central Hudson 

treated the question whether regulated speech is 

truthful and non-misleading as one of four criteria, 

it has alternately treated this question as a threshold 

inquiry, after which the three remaining criteria are 

evaluated. See Fla. Bar v. Went For It, Inc., 515 U.S. 

618, 623–24 (1995). Because the government is 

‘‘free to prevent the dissemination of commercial 

speech that is false, deceptive, or misleading,’’ 

Zauderer v. Off. of Disciplinary Couns., 471 U.S. 

626, 638 (1985), if a challenged restriction fails this 

threshold inquiry, Central Hudson does not apply. 

259Bd. of Trs. of State Univ. of N.Y. v. Fox, 492 

U.S. 469, 480 (1989). 260 Id. (citation omitted). 261 Id. (quoting In re R.M.J., 455 U.S. 191, 203 

(1982)). 

262NPRM at 42012. 

263Edenfield v. Fane, 507 U.S. 761, 769 (1993). 

264Nothing could be more directly relevant to 

accurate pricing than disclosure of the actual price 

itself. See Spirit Airlines, Inc. v. U.S. Dep’t of 

Transp., 687 F.3d 403, 415 (D.C. Cir. 2012) 

(substantial governmental interest ‘‘is clearly and 

directly advanced by a regulation requiring that the 

total, final price be’’ prominently disclosed). 

265 Id. Further, the Commission has taken into 

account prior enforcement work and other 

initiatives. See NPRM at 42022–25 (explaining 

rationale behind disclosure requirements and 

extensively citing prior enforcement experience and 

record evidence); see also Lorillard Tobacco Co. v. 

Reilly, 533 U.S. 525, 555 (2001) (‘‘We do not . . . 

require that empirical data come accompanied by 

a surfeit of background information. We have 

permitted litigants to justify speech restrictions by 

reference to studies and anecdotes . . . or even . . . 

based solely on history, consensus, and simple 

common sense.’’ (internal quotation marks and 

alterations omitted)); Fla. Bar v. Went For It, Inc., 

515 U.S. 618, 628, (1995) (same); Burson v. 

Freeman, 504 U.S. 191, 211 (1992) (finding speech 

restrictions justified even under strict scrutiny 

based on a ‘‘long history, a substantial consensus, 

and simple common sense’’); Milavetz, Gallop & 

Milavetz, P.A. v. United States, 559 U.S. 229, 251 

(2010) (‘‘When the possibility of deception is as 

self-evident as it is in this case, we need not require 

the State to conduct a survey of the public before 

it may determine that the advertisement had a 

tendency to mislead.’’ (internal quotation marks 

and alterations omitted)); Am. Hosp. Ass’n v. Azar, 

983 F.3d 528, 540 (D.C. Cir. 2020) (finding 

reasonable relationship between rule and 

governmental interests where ‘‘the Secretary, 

relying on complaints from consumers, studies of 

state initiatives, and analysis of industry practices, 

reasonably concluded that the rule’s disclosure 

scheme will help the vast majority of consumers’’). 

extensive than necessary to advance the 

interest.258 Under the Central Hudson 

test, it is not necessary that ‘‘the manner 

of restriction is absolutely the least 

severe that will achieve the desired 

end.’’ 259 Rather, there merely must be a 

‘‘ ‘fit’ between the [restriction’s] ends 

and the means chosen to accomplish 

those ends—a fit that is not necessarily 

perfect, but reasonable.’’ 260 In other 

words, the restriction should be ‘‘one 

whose scope is ‘in proportion to the 

interest served.’ ’’ 261

The disclosure provisions the 

Commission is finalizing in § 463.4 

satisfy these criteria. First, the 

disclosure provisions serve a substantial 

governmental interest by requiring 

motor vehicle dealers to provide 

accurate terms, and in particular, 

accurate pricing information, in 

advertising and sales discussions.262 As 

the Supreme Court has made clear, the 

government’s ‘‘interest in ensuring the 

accuracy of commercial information in 

the marketplace is substantial.’’ 263 And 

as explained in the paragraph-byparagraph analysis of § 463.4 in SBP 

III.D.2, the disclosure requirements set 

forth there are aimed at ensuring that 

consumers receive accurate pricing 

information and other material 

transaction terms, and that dealers 

refrain from the unfair or deceptive act 

or practice of failing to provide this 

information.264 The required 

disclosures directly advance, ‘‘fit’’ 

reasonably with, and are proportionate 

to, their intended ends of prohibiting 

and preventing unfair or deceptive 

conduct in motor vehicle transactions. 

They prevent dealers from luring 

consumers to dealerships with unfair or 

deceptive advertising tactics, from 

padding prices with unwanted add-on 

products or services, and from 

misdirecting consumers about the true 

cost of a vehicle through discussions of 

monthly payment amounts. The 

disclosure requirements effectively 

‘‘impose[] no burden on speech other 

than requiring [motor vehicle dealers] to 

disclose the total price consumers will 

have to pay. This the First Amendment 

plainly permits.’’ 265

After careful consideration of the 

comments, the Commission has 

determined to finalize the introductory 

paragraph of § 463.4 and certain of the 

disclosure requirements included in its 

NPRM, with some minor textual 

changes. The introductory paragraph of 

the NPRM proposed that it would be ‘‘a 

violation of this part and an unfair or 

deceptive act or practice in violation of 

section 5 of FTC Act for any Motor 

Vehicle Dealer to fail to make any 

disclosure required by this section, 

Clearly and Conspicuously.’’ The 

Commission is finalizing this paragraph 

with the minor textual change of 

substituting ‘‘Federal Trade Commission 

Act’’ for ‘‘FTC Act’’ for clarity and 

conformity with other parts of the Rule. 

The Commission is also adding the 

word ‘‘Covered’’ to the defined term 

‘‘Covered Motor Vehicle Dealer’’ to 

conform with the revised definition at 

§ 463.2(f), discussed in SBP III.B.2(f). 

The Commission is finalizing the 

specific disclosure requirements 

proposed at § 463.4(a), (c), (d), and (e), 

with modifications noted in the 

paragraph-by-paragraph analysis in SBP 

III.D.2(a), III.D.2(c), III.D.2(d), and 

III.D.2(e). 

In the paragraphs that follow, the 

Commission discusses the disclosure 

requirements proposed in the NPRM, 

the comments relating to the specific 

disclosures, responses to the comments, 

and the disclosure requirements 

adopted in § 463.4. 

2. Paragraph-by-Paragraph Analysis of 

§ 463.4 

(a) Offering Price 

The offering price disclosure 

provision in proposed § 463.4(a) 

required dealers to disclose a vehicle’s 

offering price in advertisements that 

reference a specific vehicle or represent 

a monetary amount or financing term for 

any vehicle, as well as upon receipt of 

a consumer communication about a 

specific vehicle or any monetary 

amount or financing term for any 

vehicle. The Commission proposed 

defining ‘‘Offering Price,’’ in § 463.2(k), 

as ‘‘the full cash price for which a 

Dealer will sell or finance the motor 

vehicle to any consumer, excluding only 

required Government Charges.’’ The 

Commission also proposed defining the 

term ‘‘Government Charges,’’ then in 

§ 463.2(h), to mean ‘‘all fees or charges 

imposed by a Federal, State or local 

government agency, unit, or department, 

including taxes, license and registration 

costs, inspection or certification costs, 

and any other such fees or charges.’’ For 

the reasons discussed in the following 

paragraphs, the Commission is 

finalizing the offering price disclosure 

provision at § 463.4(a), as well as the 

corresponding ‘‘Offering Price’’ and 

‘‘Government Charges’’ definitions in 

§ 463.2 (finalized at § 463.2(k) and (i), 

respectively), largely as proposed. The 

Commission is including a modification 

to the offering price definition to clarify 

that dealers may, but need not, exclude 

required government charges from a 

motor vehicle’s offering price, and is 

substituting ‘‘Vehicle’’ for ‘‘motor 

vehicle’’ to conform with the revised 

definition at § 463.2(e), discussed in 

SBP III.B.2(e). Additionally, the 

Commission is including a 

typographical modification to the 

‘‘Government Charges’’ definition to 

include a serial comma for consistency. 

The Commission also is capitalizing the 

defined terms ‘‘Vehicle’’ throughout, in 

its singular, plural, and possessive 

forms, and is adding language to the end 

of § 463.4(a)(3)(ii) clarifying that the 

requirements in § 463.4(a) ‘‘also are 

prescribed for the purpose of preventing 

the unfair or deceptive acts or practices 

defined in this part, including those in 

§§ 463.3(a) and (b) and 463.5(c).’’ 

The Commission received a 

significant number of comments on its 


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Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 629 

266See, e.g., Comment of Nat’l Consumer L. Ctr. 

et al., Doc. No. FTC–2022–0046–7607 at 17–20. 267 Individual commenter, Doc. No. FTC–2022– 

0046–6649. 268 Individual commenter, Doc. No. FTC–2022– 

0046–6225. 

269 Individual commenter, Doc. No. FTC–2022– 

0046–6089. 270 Individual commenter, Doc. No. FTC–2022– 

0046–6656. 271 Individual commenter, Doc. No. FTC–2022– 

0046–5238. 

272 Individual commenter, Doc. No. FTC–2022– 

0046–5227. 

273 Individual commenter, Doc. No. FTC–2022– 

0046–5228. 

274 Individual commenter, Doc. No. FTC–2022– 

0046–5219. 

275 Individual commenter, Doc. No. FTC–2022– 

0046–0900. 

proposed offering price disclosures. 

Many commenters supported the 

Commission’s proposal to require 

dealers to provide uniform, 

comprehensive, and accurate pricing 

information. These commenters noted, 

inter alia, that despite laws generally 

prohibiting unfair or deceptive acts or 

practices, present market conditions fail 

to balance the ‘‘playing field’’ of 

information between consumers and 

motor vehicle dealers, allowing dealers 

to take advantage of consumers by 

hiding information about pricing, 

imposing surprise price increases, or 

using pricing advertising tactics that 

systematically deceive consumers.266

Many consumers also underscored the 

need for the proposed disclosure 

requirements. Commenters in support 

noted, for instance: 

• Buying a car has always been a 

horrible experience for me. The endless 

driving to dealerships who advertise 

vehicles for a sale price only to find that 

the vehicle does not exist, or the price 

advertised for the specific vehicle is not 

what they had posted. The 

salespersons[’] tactics, always 

attempting to put you in a vehicle based 

on a car payment, along with dancing 

around the simple question of the actual 

out the door price of the vehicle. . . . 

It is such a shame that the dealerships 

just do not give the customer the price 

of the vehicle without them wanting to 

start a ‘‘folder’’ and take all of your 

information, a copy of your drivers 

license, ect [sic] . . . . Please regulate 

the automobile dealerships, especially 

now when it seems they are at their 

worst with these ridiculous add on fees 

(paint and upholstery protector, ect [sic] 

which was not added at the 

manufacturer) along with adjustments 

on top of the MSRP.267

• Buying a car in the US is now akin 

to what I used to do in the Army: Before 

going into the dealership, I have to 

spend hours conducting ‘‘intelligence 

prep of the battlefield’’ to understand 

the tactics the dealership’s sales and 

finance & incentives staff will throw at 

me. . . . It has been made increasingly 

worse by dealerships that advertise a 

false price to entice a buyer but ‘‘baitand-switch’’ with Additional Dealer 

Mark-Ups (ADM), and bogus fees and 

charges for supposedly dealer-installed 

items tha[t] the consumer doesn’t want 

in the first place. . . . Unless the FTC 

passes this proposed rule, things will 

get worse before they get better.268

• Though I am not usually a fan of 

adding layers of governmental 

regulations to what should be a simple 

transaction, there definitely needs to be 

a change in what is allowed in the car 

buying process. . . . As consumers we 

should not have to spend hours reading 

tiny print in obscure sections of a 

website in order to validate a posted 

price. The price should not be elevated 

at the last minute in a hidden line item 

such as a mandatory detailing package 

or service plan you do not want or need 

to the tune of thousands of dollars. . . . 

We should not have to spend hours at 

a dealer and go through mounds of 

paperwork with a fine tooth comb in 

order to simply see the ACTUAL price 

of the vehicle. It is a ridiculous ploy to 

confuse people into purchasing things 

they do not want or need.269

• I have been trying to buy a new car 

for the last two years but with 

unexpected costs I am not able to have 

a clear written contract on the car and 

its pricing. I have contacted several 

dealers in my area and many of them 

have issues that prevent me from 

commited [sic] to buying from them. 

This ranges from them not being able to 

give me a written sheet of the cost of the 

car, fees, ect [sic] showing me how 

much I will be paying in the end. . . . 

Most of the dealerships I spoke to would 

not give me a sales sheet of the vehicle 

I want to purchase to show me how 

much I will be paying in total. I would 

have to put a down payment and just 

trust them over the phone. If I can’t get 

it in writing it is hard to commit to a 

down payment I could lose.270

• Vehicles are typically the second 

largest purchase made by people. Given 

the choices available according to 

respective needs/wants, purchasing a 

vehicle should be the same as going to 

any other mass-market retailer and 

picking that appliance with a set price. 

So why do we need to haggle or expend 

additional intellectual and emotional 

bandwidth towards ensuring that the 

transaction is as initially stated? There 

are instances where I’d rather be back 

conducting combat operations in Iraq 

than go through the dealer process, as it 

incenses me that this corrupt way of 

doing business is given a free pass. . . . 

If you are a reputable and honest 

dealership, then there should be no 

worry; it will be business as usual.271

• Think of us, the car buying public. 

We are mad as hell. Please start fixing 

this crooked business model where 

nobody even knows what they are 

supposed to be paying.272

• As a consumer, I fully support this 

new proposed rules update. The 

dealership experience has been an 

anxiety provoking event everytime [sic] 

I attempt to purchase a car. I have 

multiple friends and family that all 

report shady practices, bait and switch, 

and up charging at point of sale during 

their car buying process. Please pass 

these regulations! 273

• I am writing in FULL support of the 

FTC rules and regulations. . . . Buyers 

deserve to know Out the door prices and 

not be hassled by nonsensical add-ons 

for the dealership’s benefit. People 

should feel comfortable and excited to 

buy their 1st car rather than the dread 

I feel.274

• We find the vehicle we came to see 

and see a sticker beside the 

manufacture[r] one with added prices. 

These typically include car alarms, VIN 

etching, protection packages, floor mats, 

market adjustment, etc. We go to 

purchase the vehicle now and they say 

that none of these can be removed from 

the price of the car (even though they 

advertised them without them at a much 

lower price). We attempt to negotiate 

them off and find out their [sic] is an 

additional addon like reconditioning 

fee. We fail at getting the price of the 

vehicle down to the advertised price 

and leave.275

• I have financed all of my cars, and 

the total cost for the vehicle has always 

been hidden, either physically or 

through the dealer trying to move focus 

onto other numbers such as the monthly 

payment. Since monthly payments will 

vary due to credit history, down 

payments, interest rates, taxes, and 

more, it is not an effective tool for 

measuring a deal. $300 a month could 

be a great deal on one car, and a horrible 

deal on another. I would greatly benefit 

from the proposal[’]s provision to 

clearly list and advertise the price of the 

car without additional add[-]ons. It 

would greatly reduce the work of 

finding the right car at the right 

dealership. In each of the 3 cases, I have 

gone to multiple dealers, wanting to 

purchase a specific vehicle on their lot, 

and walked away because of the hidden 


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630 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

276 Individual commenter, Doc. No. FTC–2022– 

0046–6490. 

277 Individual commenter, Doc. No. FTC–2022– 

0046–3693. 

278A number of these commenters further 

requested that the term ‘‘Offering Price’’ include 

additional dealer fees that are known to the dealer 

at the time they are advertised and imposed by the 

dealer rather than a government entity. These 

requests are addressed in the discussion of the 

Commission’s definition of ‘‘Government Charges’’ 

in SBP III.B.2(i). 

279 If a dealer does not require any consumer to 

pay for an add-on, current law, as well as 

provisions in this Rule, require dealers to refrain 

from deception in this regard. See, e.g., § 463.3(a), 

(b) (prohibiting material misrepresentations 

regarding the costs or terms of purchasing, 

financing, or leasing a vehicle, as well as any costs, 

limitation, benefit, or any other material aspect of 

add-ons); § 463.4(c) (requiring disclosures regarding 

optional add-ons). 

280See, e.g., Impose, Cambridge Advanced 

Learner’s Dictionary & Thesaurus, https://

dictionary.cambridge.org/us/dictionary/english/ 

impose (‘‘to officially force a rule, tax, punishment, 

etc. to be obeyed or received’’). 

281 Individual commenter, Doc. No. FTC–2022– 

0046–7445 at 15–16. 

costs being added to the price of the 

car.276

• I work as a salesperson at a local 

Nissan dealership. . . . Currently, 

dealerships across the US, including the 

one I work for, have made the car 

buying process needlessly confusing, 

expensive, and frustrating by engaging 

in false advertising and hidden add-on 

products. While these practices are very 

unscrupulous, they are incredibly 

effective at what they are designed to 

do: drive revenue for the store. If these 

regulations are passed, they would 

certainly take a significant toll on my 

personal finances. But the longer I work 

in my position, the more I realize that 

no one should be allowed to engage in 

such exploitative conduct in the course 

of running a business. . . . Good, 

ethical dealers will not have to make 

any changes if these rules are put into 

place. I also happen to know that 

several of the comments in opposition 

to the proposed regulations are solicited 

by dealerships and their management. 

The dealership group I work for, for 

example, sent out a company-wide 

email encouraging employees to post 

comments on this site in opposition to 

these rules. But there’s no question: The 

American people want these 

regulations. They need these 

regulations. The only ones that don’t 

want them are crooked auto dealerships 

across the US. It’s been far too long that 

such dealerships have run amuck with 

underhanded sales practices and 

deception. I would urge the FTC to 

stand strong against . . . dealership 

groups[]or any lobbyists and get these 

rules passed! I know there will be stiff 

resistance but it’s of the utmost 

importance to good dealerships, 

transparent salespeople, and, most 

importantly, the average American 

consumer! 277

A number of commenters supported 

the offering price disclosure 

requirement and associated definitions; 

some expressed support while urging 

additional protections. A number of 

commenters, including consumer 

advocacy organizations as well as 

individual commenters, requested that 

the Commission require a vehicle’s 

offering price to include additional 

items, such as charges for add-ons 

attached to the vehicle when it is 

offered, and charges for add-ons 

required by the dealer to be sold with 

the vehicle; to exclude rebate 

information, including rebates 

contingent upon the use of a certain 

financing company or upon qualifying 

for any other rebate; and to prohibit the 

exclusion of certain charges, including 

the advertisement of an offering price 

that factors out a down payment 

amount.278

To begin, the Commission notes that 

by the terms of the proposed ‘‘Offering 

Price’’ definition, the only charges a 

dealer was permitted to exclude from a 

vehicle’s offering price were required 

government charges. Thus, under the 

proposal, if a dealer were to charge any 

consumer for a preinstalled add-on, or 

require any consumer to pay for an addon to purchase or finance the vehicle, 

then the charges for such add-ons would 

be required to be included in the 

vehicle’s offering price.279 In addition, 

while the proposed provision did not 

prevent dealers from presenting 

consumers with accurate and nonmisleading additional information, 

including terms of limited availability, 

the required offering price disclosure 

needed to remain clearly and 

conspicuously presented to consumers, 

and could not be based on discounts or 

rebates that are not available to ‘‘any 

consumer,’’ including rebates 

contingent upon the use of a certain 

financing company or upon qualifying 

for any other rebate. Similarly, under 

the proposal, if the dealer required a 

down payment amount to sell or finance 

the vehicle, the offering price could not 

factor out such an amount. 

With respect to the proposed 

definition of ‘‘Government Charges,’’ 

which is used in the definition of 

‘‘Offering Price,’’ a number of consumer 

advocacy organization commenters 

contended the definition should be 

narrow to accomplish the Commission’s 

goal of ensuring that consumers have 

access to accurate pricing information 

before they enter a dealership, 

emphasizing that only charges that are 

imposed by, and payable to, a 

government entity should be permitted 

to be excluded from a vehicle’s offering 

price, and that document fees that some 

States allow dealers to charge should 

not be excluded from the offering price. 

The Commission notes that, as 

proposed, the term ‘‘Government 

Charges’’ is limited to those charges 

‘‘imposed by a Federal, State or local 

government agency, unit, or 

department.’’ The Commission specified 

in this proposed definition that such 

charges need be ‘‘imposed by’’ a 

government entity rather than, for 

instance, having merely been 

‘‘authorized by’’ or ‘‘allowed by’’ such 

an entity. This language does not reach 

charges that are authorized by a 

government entity but not required, 

since such charges have not been 

‘‘imposed’’ 280 by the government. This 

distinction therefore excludes from the 

definition of ‘‘Government Charges’’ 

fees, such as dealership document 

preparation fees that State or local law 

does not require consumers to pay. 

Furthermore, the definition of ‘‘Offering 

Price’’ at § 463.2(k) permits only 

‘‘required’’ government charges to be 

excluded from a vehicle’s offering price. 

Thus, charges the government does not 

require consumers to pay, but allows the 

dealer to charge or to pass along to the 

consumer, such as document fees, must 

be included in the disclosed offering 

price if the dealer requires such charges 

of any consumer. 

Relatedly, an individual commenter 

suggested that the Commission delete 

the phrase ‘‘inspection or certification 

costs’’ from the definition of 

‘‘Government Charges’’ in order to avoid 

confusion about the status of inspection 

or certification charges that ‘‘are NOT 

imposed by the Government,’’ as well as 

explicitly state in the definition that the 

term does ‘‘not include dealer document 

or document processing fees (‘‘doc 

fees’’), or electronic titling and 

registration fees, which are not imposed 

by the Government.’’ 281 Regarding the 

phrase ‘‘inspection or certification 

costs,’’ such costs that are not 

‘‘imposed’’ by the government are 

excluded from the definition of 

‘‘Government Charges,’’ as the plain 

language makes clear. Similarly, as 

noted, dealer document or document 

processing fees and any other fees that 

are not imposed by the government are 

excluded from the definition, as the 

plain language states. 

Some commenters, including a group 

of State attorneys general, likewise 

recommended that a vehicle’s offering 

price include ‘‘anticipated’’ or 


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282See, e.g., Comment of 18 State Att’ys Gen., 

Doc. No. FTC–2022–0046–8062 at 7; Comment of 

Consumer Att’ys & Advocs., Doc. No. FTC–2022– 

0046–7695 at 2–3 (requesting that the vehicle’s 

offering price include ‘‘an estimate of government 

fees and charges such as sales tax and registration 

based on the dealer’s location’’). 

283See § 463.2(k) (defining ‘‘Offering Price’’ as 

‘‘the full cash price for which a Dealer will sell or 

finance the Vehicle to any consumer, provided that 

the Dealer may exclude only required Government 

Charges’’). 

284Some commenters described situations in 

which a dealer may decline to sell or finance a 

vehicle to a particular consumer, including due to 

legal requirements, irrespective of whether the 

dealer otherwise intends to honor its offering price 

disclosures. These situations include, for example, 

a consumer who presented identity theft indicia 

under the Commission’s Red Flags Rule, 16 CFR 

681; a consumer on the Specially Designated 

Nationals List maintained by the Office of Foreign 

Assets Control; a consumer who cannot produce the 

required proof of insurance or license to complete 

the transaction; or a consumer who is abusive or 

violent at the dealership. The Commission’s 

offering price provision is a pricing disclosure; it 

will not otherwise alter the status quo on whether 

a given sale or financing transaction must be 

consummated. 

285As is the case under current law, under part 

463, any qualifying information necessary to 

prevent deception regarding a material fact must be 

conveyed clearly and conspicuously. See FTC 

Policy Statement on Deception, supra note 42, at 1 

n.4, 4. 

‘‘estimated’’ government charges.282 The 

Commission agrees that consumers 

would benefit from knowing this 

information early on in their shopping 

experience, and notes that dealers are 

permitted under this Final Rule to 

provide additional, truthful information 

along with a vehicle’s offering price. 

Rather than requiring that anticipated 

government charges be included in the 

offering price, the Commission is 

modifying the definition from its 

original proposal to make clear that 

dealers need not exclude any such 

charges from the offering price. The 

Commission will evaluate whether the 

definition, as finalized, as well as its 

associated disclosure, effectively 

address deceptive and unfair market 

conduct, and will consider future 

modifications as market practices 

evolve. 

Thus, the Commission is finalizing a 

definition of ‘‘Offering Price’’ that 

clarifies that dealers may, but need not, 

exclude required government charges 

from a vehicle’s offering price that 

meets the requirements of § 463.2(k). In 

particular, the Commission is finalizing 

a definition of ‘‘Offering Price’’ that 

removes the phrase ‘‘excluding only’’ 

and adds the phrase ‘‘provided that the 

Dealer may exclude only’’ in its place. 

The definition also substitutes 

‘‘Vehicle’’ for ‘‘motor vehicle’’ to 

conform with the revised definition of 

‘‘‘Covered Motor Vehicle’ or ‘Vehicle’’’ 

at § 463.2(e), such that the definition 

reads as follows: ‘‘Offering Price means 

the full cash price for which a Dealer 

will sell or finance the Vehicle to any 

consumer, provided that the Dealer may 

exclude only required Government 

Charges.’’ 

Other commenters, including 

consumer advocacy organizations, 

proposed additional requirements to the 

disclosure at § 463.4(a): prescribing 

formatting, posting, and presentation 

requirements for offering price 

information, such as attaching a written 

offering price to each vehicle, providing 

written offering price information in 

response to consumer communications 

regardless of whether the 

communications are written, and 

requiring offering price to be the most 

conspicuous piece of information 

displayed to consumers. Regarding the 

manner in which the offering price must 

be presented, the Commission proposed 

that all disclosures under § 463.4, 

including the offering price disclosure, 

be presented clearly and conspicuously. 

As previously discussed, the proposed 

disclosure provisions were directed at 

addressing unlawful conduct while 

providing dealers with flexibility to 

present such disclosures in a manner 

that is clear and conspicuous to their 

consumers under the particular 

circumstances. Thus, the Commission 

has determined not to adopt further 

formatting, posting, or presentation 

requirements for its offering price 

disclosure. 

Some commenters, including 

consumer advocacy organizations and a 

consumer protection agency, proposed 

that the Commission adopt an 

additional requirement providing that 

dealers must accept an offer from a 

buyer of the offering price. In response, 

the Commission notes that, under its 

proposal, if a dealer were requiring any 

consumer to pay a price that was higher 

than the disclosed offering price, or 

adding other conditions—such as 

requiring the use of a particular finance 

company or the purchase of an add-on— 

to obtain the vehicle at the offering 

price, such practices would violate part 

463, including the offering price 

provision, which requires disclosure of 

the full cash price for which the dealer 

will sell or finance the vehicle to any 

consumer,283 and the related 

requirement the Commission is 

finalizing under § 463.3(p), which 

prohibits misrepresentations regarding 

the required disclosures in part 463.284

An individual commenter proposed 

that the Commission adopt additional 

requirements requiring dealers to 

itemize and disclose each subcomponent of the offering price, 

including any applicable document fee. 

The Commission notes that it has not 

been presented with any evidence that 

the benefits of such additional 

disclosure requirements outweigh the 

costs to consumers and competition. 

The Commission may consider 

additional such restrictions or 

additional guidance in the future, based 

on stakeholder experience with part 463 

and whether it effectively remediates 

unlawful conduct. 

Other individual commenters 

proposed that the Commission impose 

limitations on the price of the vehicle— 

for example, prohibiting dealers from 

charging more than MSRP for the 

vehicle—or prohibit or limit particular 

charges, such as dealer fees, document 

fees, and destination charges. The 

Commission notes that several Rule 

provisions will prohibit hidden charges 

and deception related to pricing, 

including § 463.4(a) (offering price 

disclosure) and § 463.3(a) (prohibition 

against misrepresenting the costs or 

terms of purchasing, financing, or 

leasing a vehicle). Before including 

additional provisions, the Commission 

will continue studying the market, 

including after the Rule is in effect, to 

determine whether additional steps are 

needed. 

Other commenters opposed the 

offering price disclosure and related 

definitions. Commenters including an 

industry association contended that, by 

defining ‘‘Offering Price’’ in § 463.2(k) 

as the price ‘‘for which a Dealer will sell 

or finance the motor vehicle to any 

consumer,’’ the Commission would 

prohibit dealers from changing vehicle 

prices as market conditions change, 

thereby making vehicle pricing less 

dynamic than under current industry 

practice. 

Section 463.4 and the offering price 

definition in § 463.2(k), however, do not 

alter the current status quo on pricing 

accuracy or pricing changes. Consistent 

with the law, the offering price—as with 

a presently advertised price—must be 

truthful and non-misleading. If the 

offering price is only available for a 

certain period of time, the 

advertisement must convey that fact 

clearly and conspicuously, and if it is 

no longer available, the dealer must 

cease advertising the offering price.285

Some commenters expressed a related 

concern that the Commission’s offering 

price disclosure requirement could 

require dealers to change their practices 

when an advertised vehicle is no longer 

available. For example, one industry 

commenter asked whether, under such 

circumstances, a dealer would somehow 

be obligated to sell some other vehicle 


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632 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

286A number of dealership associations expressed 

a related concern that the Commission, through its 

offering price proposal, was somehow seeking to 

restrict competition between dealers to being only 

about the price of vehicles. The associations 

described other areas, beyond vehicle price, by 

which dealerships currently distinguish themselves 

(e.g., their range of products and services; their 

service availability; the convenience of their 

locations; and the nature of their sales staffing and 

process). In response, the Commission notes that it 

has long recognized the importance of protecting 

competition across both price and quality metrics, 

including providing consumers with truthful, 

nondeceptive advertising. See, e.g., Cal. Dental 

Ass’n v. Fed. Trade Comm’n, 526 U.S. 756, 766–68 

(1999) (affirming Commission exercise of law 

enforcement authority against industry guidelines 

that unlawfully restricted both price advertising 

and advertising relating to the quality of dental 

services). As noted, the offering price disclosure 

requirement does not prevent dealers from 

presenting accurate and non-misleading additional 

information, including information about any such 

distinguishing characteristics, so long as the 

offering price is presented clearly and 

conspicuously. 

287For reference, § 463.3(p), which the 

Commission is finalizing, see SBP III.C.2(p), 

prohibits dealers from making material 

misrepresentations regarding ‘‘[a]ny of the required 

disclosures’’ under the Final Rule. 

288See NPRM at 42023. 

289Comment of Tex. Auto. Dealers Ass’n, Doc. 

No. FTC–2022–0046–8102 at 29–30. 

to that consumer at the offering price. 

Here, the offering price disclosure 

requirement does not alter the status 

quo: Under § 463.4(a), as under current 

law, if an offer is limited to a particular 

period of time, the offer must convey 

that fact, and once a price is no longer 

available, the dealer must cease 

advertising that price. Regarding which 

vehicles to sell at an advertised offering 

price, under the Commission’s proposal, 

the dealer must disclose the offering 

price for the vehicles advertised. If the 

dealer charges a different price, then the 

dealer has not disclosed the offering 

price for which the dealer will sell or 

finance the vehicle, and the dealer has 

misrepresented the price of the vehicle, 

in violation of several provisions, 

including §§ 463.3(b) and (p) and 

463.4(a). For example, if a dealer 

conveys that all vehicles of a certain 

nature or in a certain category are 

available at a particular offering price, 

but charges a higher offering price for 

any vehicle of that nature or in that 

category, the dealer has violated the 

Rule. 

Other comments, including from a 

member of Congress and from 

dealership associations, raised concerns 

that the Commission’s proposal would 

limit dealers from advertising rebates, 

discounts, or incentives of limited 

availability, including when 

qualifications for such rebates, 

discounts, or incentives are identified in 

the advertising, further contending that 

such a result would contradict prior 

FTC practice. Relatedly, commenters 

including an industry association 

questioned whether the Commission’s 

proposal prohibited dealers from 

advertising additional vehicle prices, 

contending that such a result would 

conflict with the longstanding 

obligation under Federal law to disclose 

a vehicle’s Manufacturer’s Suggested 

Retail Price, or MSRP. The Commission 

notes, however, that the offering price 

disclosure requirement does not prevent 

dealers from presenting accurate and 

non-misleading additional information, 

including terms of limited availability, 

so long as the required offering price 

disclosure remains clearly and 

conspicuously presented to 

consumers.286 If, however, a dealer’s 

disclosure were to give consumers a net 

pricing impression that is contrary to 

that which is actually available, then the 

disclosure would violate § 463.4(a), and 

the related requirement under 

§ 463.3(p).287

Some commenters, including 

dealership associations, generally 

concluded the Commission’s proposed 

offering price definition, or its 

associated disclosure provision, were 

unnecessary, confusing, burdensome, or 

likely to hinder comparison shopping. 

Some commenters, for instance, 

contended that their respective States 

already prohibit misrepresenting price 

terms, rendering the Commission’s 

proposal redundant. The Commission 

notes, however, that a simple disclosure 

of the offering price, using the same 

definition across States, addresses 

multiple issues, including: the 

promotion of prices based on dealer 

discounts, rebates, or other price 

reductions when such benefits are in 

fact subject to hidden or undisclosed 

restrictions that render them 

unavailable to typical customers; the 

concealment or omission of additional 

dealer charges, such as for document 

preparation fees, amounting to several 

hundred dollars; the advertisement of a 

price without disclosing material 

limitations or additional charges 

required by the dealer that are fixed and 

thus can be readily included in the price 

at the outset; and the inducement to 

pursue pricing offers that are not 

actually available or to pay more for a 

vehicle due to inadequate or 

nonexistent disclosures. Moreover, this 

disclosure and the associated 

definitions should produce the corollary 

benefit of increasing price competition 

among dealers, who will be able to 

compete on truthful, standard terms.288

The Commission also concludes that the 

claim that its offering price disclosure 

requirement would limit comparison 

shopping appears to follow from the 

mistaken notion that the offering price 

disclosure prohibits dealerships from 

conveying accurate additional 

information to consumers, including 

information about rebates, discounts, or 

other limited-availability incentives. 

Relatedly, some dealership 

association commenters contended 

there are areas of overlap, or potential 

conflict, with State law. Pursuant to 

§ 463.9 of part 463, where it is possible 

for dealers to comply with both State 

law and the provisions of this 

regulation, or where State law affords 

greater consumer protection, part 463 

will not displace existing State pricing 

or disclosure regimes. This addresses 

many of the commenters’ concerns 

about State law. Some dealership 

associations, for instance, contend that 

their respective States require dealers to 

separately disclose a dealer document 

fee and not represent that the fee is 

required by the State, or that they allow 

dealers, with certain limitations, to 

incorporate rebates into an advertised 

price. Regarding document fees, dealers 

can simultaneously comply with part 

463, which requires document fees to be 

included in the offering price unless 

they are ‘‘required’’ government charges, 

and with State law that permits but does 

not require document fees to be 

excluded from a vehicle’s advertised 

price, or that requires disclosure of the 

amount of the document fee and that 

such a fee is not required by the State, 

by disclosing the offering price and any 

additional State-required information, 

such as the amount of the dealer 

document fee. Similarly, regarding 

rebates, in addition to the offering price, 

dealers may provide consumers with 

additional pricing information, 

including regarding rebates or other 

incentive pricing, so long as the offering 

price remains clear and conspicuous, 

and any additional information is 

truthful and non-misleading and 

otherwise complies with part 463 and 

existing law. 

Another dealership association 

commenter urged the Commission to 

consider using an existing definition, 

including a State-law definition of 

‘‘sales price’’ or the definition of ‘‘cash 

price’’ under the Truth in Lending Act’s 

Regulation Z, in lieu of its proposed 

offering price definition.289 The 

Commission notes that its offering price 

definition overlaps substantially with 

the commenter’s suggested State-law 

‘‘sales price’’ definition, which, 

according to the commenter, requires 

that a vehicle’s advertised price be one 

at which ‘‘the dealer must be willing to 

sell the motor vehicle . . . to any retail 


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290 Id.; see also 43 Tex. Admin. Code 215.250(a), 

(b) (2023). 291Comment of Tex. Auto. Dealers Ass’n, Doc. 

No. FTC–2022–0046–8102 at 29–30; see also 43 

Tex. Admin. Code 215.250(b)(3) (2023). 292See 12 CFR 226.2(a)(9). 

293The industry association commenter further 

contended that this provision would apply to 

dealers based on whether they have a service 

department, but this is incorrect, as explained in 

the analysis of the definition of ‘‘ ‘Covered Motor 

Vehicle Dealer’ or ‘Dealer’ ’’ in SBP III.B.2(f). 

294See, e.g., Buckle Up, supra note 63, at 5 

(noting consumer confusion about how the vehicle 

price they were offered was determined and that 

consumers did not understand they could negotiate 

price); id. at 9 (observing add-on products or 

services, which typically increase a vehicle’s 

purchase price, were ‘‘the single greatest area of 

confusion’’ in the study); Att’ys Gen. of 31 States 

& DC, Comment Letter on Public Roundtables: 

Protecting Consumers in the Sale and Leasing of 

Motor Vehicles, Project No. P104811, Submission 

No. 558507–00112–1 at 5–6 (Apr. 13, 2012), https:// 

www.ftc.gov/sites/default/files/documents/public_

comments/public-roundtables-protectingconsumers-sale-and-leasing-motor-vehicles-projectno.p104811-00112/00112-82927.pdf. 

295Comment of Tex. Auto. Dealers Ass’n, Doc. 

No. FTC–2022–0046–8102 at 14. 

296 Id. 

297 Indeed, as the Commission also noted in its 

NPRM, an entity that induces the first contact 

through false or misleading representation is liable 

under the FTC Act, regardless if the buyer later 

becomes fully informed. See, e.g., Resort Car Rental 

Sys., Inc. v. Fed. Trade Comm’n, 518 F.2d 962, 964 

(9th Cir. 1975); Fed. Trade Comm’n v. Gill, 71 F. 

Supp. 2d 1030, 1046 (C.D. Cal. 1999), aff’d, 265 

F.3d 944 (9th Cir. 2001). 

298For example, California and Wisconsin have 

similarly enacted laws that make it unlawful for 

dealerships to advertise a total price without 

including additional costs to the purchaser outside 

the mandatory fees such as tax, title, and 

registration fees. Cal. Veh. Code 11713.1(b), (c) 

(2023); Wis. Admin. Code. Trans. 139.03(3) (2023). 

In Louisiana, the advertised price must be the full 

cash price for which a vehicle will be sold to any 

and all members of the buying public. La. Admin. 

Code tit. 46, pt. V, 719 (2023). 

buyer’’; which ‘‘must’’ include certain 

additional charges that are fixed and 

thus can be readily included in the price 

at the outset, including ‘‘[d]estination 

and dealer preparation charges’’; and 

which permits only certain categories of 

costs and charges to be excluded.290

Based on the commenter’s description, 

unlike the Commission’s definition, this 

State-law definition permits the 

exclusion of fees ‘‘allowed’’ by law or 

those which the law has 

‘‘prescribed.’’ 291 Again, the Rule 

permits only charges that the 

government requires the consumer to 

pay to be excluded from a vehicle’s 

offering price, by defining ‘‘Offering 

Price’’ to allow only ‘‘required 

Government Charges’’ to be excluded. 

This difference from the State law 

described by the commenter, however, 

creates no conflict—a dealer governed 

by that State law will be able to comply 

with both requirements by disclosing an 

offering price that excludes only 

required government charges and 

includes allowable government charges. 

Similarly, commenters have not 

demonstrated any actual conflicts 

between the proposed offering price 

definition and TILA’s definition of 

‘‘cash price.’’ 292 Dealers can comply 

with both requirements by disclosing an 

offering price that excludes only 

required government charges. And the 

Rule’s definition addresses specific 

unfair and deceptive conduct in the 

auto marketplace. Were offering prices 

to exclude additional categories, the 

resulting disclosure provision at 

§ 463.4(a) would permit dealers to lure 

consumers to dealership lots based on a 

price that is not actually the price the 

dealer would require the consumer to 

pay, a result that would require 

consumers to spend time traveling to 

the dealership and time on the lot to 

attempt to discover the true price, and 

that would place dealerships that 

choose to advertise the price truthfully 

at a competitive disadvantage. 

Relatedly, commenters including an 

industry association contended that no 

additional regulation of pricing or credit 

and lease advertising was necessary 

beyond that provided by existing 

practice or by the Truth in Lending Act, 

the Consumer Leasing Act, and their 

implementing Regulations Z and M, and 

relatedly, that the Commission’s offering 

price disclosure requirement 

duplicated, modified, or ignored such 

existing law. The disclosure 

requirement, however, is consistent 

with these existing legal obligations and 

does not disturb them; dealers can and 

should make the disclosures required 

under TILA and other laws as well as 

the offering price disclosure required by 

the Final Rule. The provision requires 

dealers to disclose simple and highly 

material pricing information under 

certain circumstances.293 Providing 

consumers with accurate and timely 

pricing and financing information is 

critical, especially in the context of 

motor vehicle sales.294

Several commenters requested 

modifications to limit or expand the 

proposed definition of ‘‘Government 

Charges,’’ or clarification regarding this 

term’s application to certain fees. For 

example, commenters, including a 

dealership association, urged the 

Commission to modify this proposed 

definition to include charges that are 

‘‘allowed to be charged but not required 

or imposed by a Federal, State, or local 

government agency, unit, or 

department.’’ 295 One such commenter 

provided the example of certain 

registration and title charges, which it 

described as ‘‘not necessarily imposed 

or mandatory fees’’ and for which ‘‘the 

amount may vary, depending on the 

county’’ and the dealership, and within 

a governmentally determined range.296

Regarding registration and title charges, 

to the extent such charges are required 

by a government agency, unit, or 

department, then they fall within the 

‘‘Government Charges’’ definition as 

charges ‘‘imposed by’’ such agency, 

unit, or department. If, however, there 

are title, registration, or other fees, 

beyond any title and registration fees 

required by the government, that dealers 

are allowed, but not required, to charge, 

such fees do not fall within the 

‘‘Government Charges’’ definition, and 

to the extent a dealer imposes such 

allowable charges on any consumer, 

such fees must be included in the 

offering price. Were the Commission to 

categorize such allowed, but not 

required, amounts as ‘‘Government 

Charges,’’ dealers would be allowed to 

exclude them from a vehicle’s offering 

price but then require consumers to pay 

them anyway, thereby allowing dealers 

to lure consumers to their lots based on 

a price that is not actually the price the 

dealer would require the consumer to 

pay—a fact that consumers would not 

learn until they have spent time 

traveling to the dealership and time on 

the lot, if they learn this fact at all.297

Further, under such circumstances, 

dealerships that choose to advertise the 

price truthfully would be at a 

competitive disadvantage. The 

Commission therefore declines to 

finalize the definition with such a 

modification. 

Commenters, including a number of 

dealership associations, contended there 

were burdens associated with the 

Commission’s offering price disclosure 

requirement, claiming it would cause 

dealers to require documenting every 

contact with a consumer in which a 

specific vehicle was mentioned, thereby 

lengthening the sales process and 

increasing the recordkeeping burden. 

Comments regarding recordkeeping 

requirements, including records that 

must be created and maintained under 

this Rule, are addressed in the sectionby-section analysis of § 463.6. Here, the 

Commission notes that accurate pricing 

communication is already required by 

law. Section 463.4(a) does not require a 

complex or lengthy disclosure, is based 

on similar provisions already in 

operation in certain States,298 will 

operate as a key safeguard in States 

without such provisions, and, as 

discussed in the following paragraphs, 

addresses deceptive and unfair conduct. 

Further, this offering price requirement 

will save consumers time when 


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299See FTC Policy Statement on Deception, supra 

note 42, at 2, 5 (describing the Commission’s ‘‘net 

impression’’ standard for determining the meaning 

of an advertisement). 

300Kraft, Inc., 114 F.T.C. 40, 120 (1991) (quoting 

Thompson Med. Co., Inc., 104 F.T.C. 648, 788 

(1984), aff’d, 791 F. 2d 189 (D.C. Cir. 1986), cert. 

denied, 479 U.S. 1086 (1987)). 

301See Any (def. 1), Merriam-Webster.com 

Dictionary, https://www.merriam-webster.com/ 

dictionary/any (defining ‘‘any’’ as ‘‘one or some 

indiscriminately of whatever kind’’). 

302See, e.g., Complaint ¶¶ 23–26, Fed. Trade 

Comm’n v. N. Am. Auto. Servs., Inc., No. 1:22–cv– 

01690 (N.D. Ill. Mar. 31, 2022) (alleging that many 

consumers drive hours to dealerships). 

303See, e.g., Auto Buyer Study, supra note 25, at 

15 (noting that the purchase transactions in the 

FTC’s qualitative study often took 5 hours or more 

to complete, with some extending over several 

days); Cf. 2020 Cox Automotive Car Buyer Journey, 

supra note 25, at 6 (reporting average consumer 

time spent shopping for a vehicle at 14 hours, 53 

minutes, including 1 hour, 49 minutes visiting 

dealerships/sellers). 

shopping for a vehicle by requiring the 

provision of salient, material 

information early in the process and 

eliminating time otherwise spent 

pursuing misleading offers. For dealers 

already disclosing accurate pricing 

information upfront, this provision 

allows them to compete on an even 

playing field. 

Another industry association 

commenter contended that, by requiring 

offering price to be disclosed when an 

advertisement references a specific 

vehicle or represents a monetary 

amount or financing term ‘‘by 

implication,’’ the Commission’s 

disclosure requirement could apply to 

advertisements that merely list a 

dealer’s website, on which specific 

vehicles and their prices appear. Under 

the Commission’s proposal, an 

advertisement that does not expressly 

reference a specific vehicle or expressly 

refer to a monetary amount or financing 

term would not do so ‘‘by implication’’ 

solely by referring to a website, 

document, or other destination where 

such information may otherwise be 

available, absent evidence that the net 

impression of a reasonable consumer is 

that the advertisement implicitly 

references such terms.299 The phrasing 

in the Commission’s requirement— 

‘‘expressly or by implication’’—refers to 

the nature of the claims conveyed by a 

dealer’s advertisement (i.e., whether 

such claims are made expressly or by 

implication). For more than three 

decades, the Commission has explained 

express and implied claims as follows: 

Express claims directly state the 

representation at issue. Implied claims are 

any claims that are not express. They range 

on a continuum from claims that would be 

‘‘virtually synonymous with an express claim 

through language that literally says one thing 

but strongly suggests another to language 

which relatively few consumers would 

interpret as making a particular 

representation.’’ 300

This same industry association 

commenter contended that its 

aforementioned concerns—that the 

disclosure requirement would prohibit 

dynamic pricing, and that the 

requirement would extend to 

advertisements simply by virtue of their 

referencing a dealer’s website—would 

together cause dealers to curb their 

pricing representations in advertising, 

either by limiting such representations 

to a vehicle’s MSRP or by factoring out 

pricing altogether. As previously 

discussed, these concerns appear to 

misunderstand either existing legal 

requirements or the fact that an offering 

price disclosure would operate 

consistent with those requirements. The 

Commission’s requirement simply 

requires dealers to disclose an offering 

price and does not alter the current 

status quo on pricing accuracy. To the 

extent there is a concern that requiring 

accurate pricing information limits 

dealers to advertising MSRP or forgoing 

advertising pricing information 

altogether, such concerns apply equally 

under current law—including in States 

with pricing disclosure requirements 

that resemble the Commission’s offering 

price disclosure requirement. The 

Commission, however, has not been 

presented with evidence suggesting that 

dealers will not want to distinguish 

themselves from other dealers on price, 

and will instead default to advertising a 

price that is offered by all of their 

competitors. 

Another concern raised by this same 

industry association commenter was 

that, by requiring an offering price ‘‘in 

the Dealer’s first response’’ to a 

consumer communication that 

references a specific vehicle or a 

monetary amount or financing term for 

any vehicle, the requirement would 

prohibit dealers from explaining the 

offering price and why it is being 

provided, and that as a result, 

consumers may understand the offering 

price to be non-negotiable. Under 

§ 463.4, however, dealers continue to be 

permitted to communicate accurate 

additional information, including the 

availability of discounts or the dealer’s 

willingness to negotiate, as long as the 

offering price disclosure remains clear 

and conspicuous. 

The same industry association 

commenter asserted that mandating the 

disclosure of the offering price in 

connection with ‘‘any communication 

with a consumer’’ would result in 

excessive and non-responsive 

disclosures. The commenter provided 

the example of a consumer who contacts 

a dealership to ask whether the 

dealership has ‘‘a silver [Ford] F–150 in 

stock,’’ arguing that the Commission’s 

proposal would require the dealer to 

respond with offering price information 

for each of the numerous (in the 

commenter’s example, 40) silver F–150 

vehicles the dealer has in stock. To 

begin, if the entire communication 

simply asks, ‘‘Do you have a silver Ford 

F–150 in stock?,’’ it does not concern a 

‘‘specific vehicle’’; it concerns a group 

of vehicles—silver Ford F–150s—and, 

under § 463.4, the dealer is not required 

to disclose an offering price, so long as 

the dealer’s reply does not reference 

either (1) a specific vehicle or (2) a 

monetary amount or financing term for 

any vehicle, whether a specific vehicle 

or a group of vehicles.301 If, however, 

the dealer chooses to respond by 

discussing a specific vehicle—whether 

by describing that vehicle, referring to a 

stock or VIN number, or using other 

means—the dealer is required to 

disclose the offering price for that 

specific vehicle. If the dealer chooses to 

respond by discussing several specific 

vehicles, the offering price disclosure 

requirement applies for each such 

vehicle. Finally, the offering price 

disclosure requirement applies if the 

dealer’s response references a monetary 

amount or financing term, such as a 

down payment or monthly payment 

amount, for a specific vehicle or a group 

of vehicles. This requirement applies 

only to the dealer’s first response 

regarding the specific vehicle. It does 

not apply to subsequent 

communications about that specific 

vehicle. 

The failure to disclose a vehicle’s 

offering price in an advertisement or 

other communication that references a 

specific vehicle, or a monetary amount 

or financing term for any vehicle, is 

likely to cause substantial injury to 

consumers who waste time and effort 

pursuing offers that are not actually 

available or end up paying more for a 

vehicle than they expected or being 

subject to hidden charges. 

Buying or leasing a vehicle is timeconsuming and often the most 

expensive purchase a consumer makes 

without knowing the actual price of the 

product at the outset. Consumers can 

spend hours driving to a dealership.302

Once at the dealership, it can then take 

several hours to days to finalize a 

transaction 303 before the consumer 

learns the price of the vehicle. And 

many consumers never learn the true 

price at all; part of the finalization 

process includes signing dense 

paperwork, where information regarding 

the price of the vehicle and charges for 


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304See Nat’l Consumer L. Ctr., ‘‘Auto Add-Ons 

Add Up: How Dealer Discretion Drives Excessive, 

Arbitrary and Discriminatory Pricing’’ (2017), 

https://www.nclc.org/wp-content/uploads/2022/09/ 

auto_add_on_charts.pdf; Complaint ¶¶ 25, 27–28, 

Fed. Trade Comm’n v. N. Am. Auto. Servs., Inc., 

No. 1:22–cv–01690 (N.D. Ill. Mar. 31, 2022) 

(alleging defendants charged thousands of 

consumers hundreds to thousands of dollars each 

for unauthorized add-ons, totaling in aggregate over 

$70 million since 2017); Complaint ¶¶ 59, 61, Fed. 

Trade Comm’n v. Universal City Nissan, Inc., No. 

2:16–cv–07329 (C.D. Cal. Sept. 29, 2016) (alleging 

unauthorized add-on charges costing thousands of 

dollars). 

305According to public reports, 81% of new 

motor vehicle purchases, and nearly 35% of used 

vehicle purchases, are financed. See Melinda 

Zabritski, Experian Info. Sols., Inc., ‘‘Automotive 

Industry Insights: Finance Market Report Q4 2020’’ 

at 4, https://www.autofinancenews.net/wp-content/ 

uploads/2021/03/2020-Q4-Auto-Finance-NewsIndustry-Pulse.pdf. 

306See, e.g., Complaint ¶¶ 17–19, 44, Fed. Trade 

Comm’n v. Liberty Chevrolet, Inc., No. 1:20–cv– 

03945 (S.D.N.Y. May 21, 2020) (dealers inflated the 

car price on paperwork in the middle of the sale 

without the consumer’s knowledge or 

authorization, a practice they internally referred to 

as adding ‘‘air money’’); Complaint ¶¶ 24–27, Fed. 

Trade Comm’n v. N. Am. Auto. Servs., Inc., No. 

1:22–cv–01690 (N.D. Ill. Mar. 31, 2022) (alleging 

that defendants buried charges for add-ons in 

voluminous paperwork, making it difficult to 

detect). 

307See, e.g., Fed. Trade Comm’n. v. Windward 

Mktg., Inc., 1997 WL 33642380, at *10 (N.D. Ga. 

Sept. 30, 1997)) (‘‘[A]ny representations concerning 

the price of a product or service are presumptively 

material.’’); Thompson Med. Co., Inc., 104 F.T.C. 

648, 817 (1984); see also Fed. Trade Comm’n v. 

Crescent Pub. Grp., Inc., 129 F. Supp. 2d 311, 321 

(S.D.N.Y. 2001) (‘‘Information concerning prices or 

charges for goods or services is material, as it is 

‘likely to affect a consumer’s choice of or conduct 

regarding a product.’ ’’). 

308Consumers who expect particular prices, 

based on the MSRP or Kelley Blue Book, are also 

misled when true pricing information is not 

disclosed upfront. See, e.g., Individual commenter, 

Doc. No. FTC–2022–0046–1878 (‘‘We ended up 

having to drive 3 hours to get the [vehicle we] 

wanted. Upon arriving to pickup the car we were 

told there was a 4300 increase over MSRP.’’); 

Individual commenter, Doc. No. FTC–2022–0046– 

1690 (‘‘It was only after five hours at the dealership 

that we discovered the dealer had added on a $3000 

market adjustment and $3100 in other add-ons 

(nitrogen-filled tires, LoJack, paint protection) to 

MSRP.’’). The average transaction price of a new 

vehicle exceeded the average manufacturer’s 

suggested retail price (MSRP) for twenty 

consecutive months between 2021 and 2023. See 

Cox Auto., ‘‘After Nearly Two Years, New-Vehicle 

Transaction Prices Fall Below Sticker Price in 

March, According to New Data from Kelley Blue 

Book’’ (Apr. 11, 2023), https://

www.coxautoinc.com/market-insights/kbb-atpmarch-2023/; see also Edmunds, ‘‘8 Out of 10 of Car 

Shoppers Paid Above Sticker Price for New 

Vehicles in January, According to Edmunds’’ (Feb. 

15, 2022), https://www.edmunds.com/industry/ 

press/8-out-of-10-of-car-shoppers-paid-abovesticker-price-for-new-vehicles-in-january-accordingto-edmunds.html; iSeeCars, ‘‘10 New Cars Priced 

the Highest Over MSRP, Even as Peak Pricing 

Eases’’ (Mar. 19, 2023), https://www.yourerie.com/ 

news/10-new-cars-priced-the-highest-over-msrpeven-as-peak-pricing-eases/ (finding the average 

new car price was 8.8% over MSRP). 

other items is easily obscured, 

especially if consumers are not provided 

with baseline price information around 

which to anchor the lengthy, dense 

discussions and process. When 

consumers are not provided with such 

price information, they are susceptible 

to hidden charges such as ‘‘junk fees’’ or 

unnecessary add-ons that can cost 

consumers thousands of dollars and 

significantly increase their overall 

expense.304 These hidden charges 

substantially injure consumers by 

increasing their total cost as well as 

their debt burden in the many instances 

where vehicle purchases are 

financed.305

Moreover, the consumer injury caused 

by the lack of price information is not 

reasonably avoidable. The dealer has 

sole control over pricing information 

and the timing of when it is provided to 

consumers. Even if the consumer learns 

of the price of the vehicle before 

finalizing the transaction, the consumer 

has already spent time and effort 

traveling to the dealer, on the dealership 

lot, and in the financing office, and for 

many, the immediate need for the 

vehicle for work, school, childcare, 

groceries, medical visits, and other vital 

household reasons makes it infeasible to 

start the process anew at a different 

dealership. Further, during the lengthy 

vehicle-buying process and in complex, 

dense paperwork, it is especially easy to 

hide or alter price information or 

include hidden charges when 

consumers are not provided with 

baseline price information around 

which to anchor the discussion of 

vehicles, monetary amounts, or 

financing terms.306

The injury to consumers from a lack 

of price information is not outweighed 

by benefits to consumers or competition 

from withholding this basic 

information. Instead, upfront 

information about the offering price 

protects consumers from lost time and 

effort, supracompetitive prices, and 

unexpected charges while increasing 

price competition among dealers, who 

should be able to compete on truthful, 

standard terms. The costs of providing 

price information—which the dealer 

determines and can calculate upfront— 

are minimal for dealers that are already 

advertising a specific vehicle, monetary 

amount, or financing term, especially 

when compared to the injury to 

consumers. 

Thus, the failure to disclose a 

vehicle’s offering price in an 

advertisement or other communication 

that references a specific vehicle, or a 

monetary amount or financing term for 

any vehicle is an unfair practice. 

The Commission notes that 

§ 463.4(a)(1) and (2) affects only dealers 

that are already advertising about 

specific vehicles or monetary amounts 

or financing terms; it does not affect 

businesses that do not expend funds on 

advertising specific vehicles, monetary 

amounts, or financing terms. The 

Commission will continue to monitor 

the market to assess whether this 

approach is sufficient to address the 

harms associated with a lack of price 

and charge information. If not, the 

Commission will revisit whether 

additional measures are necessary, such 

as requiring price information in all 

advertising, requiring total charge 

estimates, or prohibiting charges for 

additional items along with a vehicle 

sale. 

Regarding deception, price is one of 

the most material pieces of information 

for a consumer in making an informed 

purchasing decision.307 Yet, including 

as illustrated by the Commission’s law 

enforcement efforts, it can be difficult 

for consumers to uncover the actual 

price for which a dealer will sell an 

advertised vehicle until visiting the 

dealership and spending hours on the 

lot. When an advertisement or other 

communication references a monetary 

amount or financing term, it is 

reasonable for a consumer to expect that 

those amounts and terms are available at 

other standard terms. If instead, for 

example, a dealer advertises a low 

monthly payment based on an 

unexpectedly long financing term or an 

unexpectedly high interest rate that 

results in a higher price than standard 

terms would have, then the consumer is 

lured to the dealership based on a 

misimpression of what they reasonably 

expect the total price to be. 

If a dealer advertises a specific 

vehicle, it is reasonable for a consumer 

to expect to learn the true offering price 

of the vehicle upon visiting the 

dealership. Consumers are misled when 

dealers misrepresent or otherwise 

obscure price information or charge for 

items beyond the advertised vehicle 

during the long and complex sales, 

financing, and leasing process.308

If consumers knew that the true price 

was beyond what was expected or that 

the prices and charges were for 

unwanted items, that would likely affect 

their choice to visit one dealership over 

another dealership. Thus, misleading 

consumers about price information is 

material. See, e.g., Fed. Trade Comm’n 

v. Windward Mktg., Inc., No. Civ.A. 

1:96–CV–615F, 1997 WL 33642380, at 

*10 (N.D. Ga. Sept. 30, 1997) (‘‘[A]ny 

representations concerning the price of 

a product or service are presumptively 

material.’’ (citing Removatron Int’l 

Corp., 111 F.T.C. 206, 309 (1988)); 


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309Even if some consumers were not misled by 

the failure to disclose the offering price, to show 

deception under the FTC Act, ‘‘the FTC need not 

prove that every consumer was injured. The 

existence of some satisfied customers does not 

constitute a defense. . . .’’ Fed. Trade Comm’n v. 

Amy Travel Serv., Inc., 875 F.2d 564, 572 (7th Cir. 

1989), vacated in part on other grounds, Fed. Trade 

Comm’n v. Credit Bureau Ctr., LLC, 937 F.3d 764 

(7th Cir. 2019); accord Fed. Trade Comm’n v. 

Stefanchik, 559 F.3d 924, 929 n.12 (9th Cir. 2009). 

310See 15 U.S.C. 57a(a)(1)(B) (the Commission 

‘‘may include requirements prescribed for the 

purpose of preventing’’ unfair or deceptive acts or 

practices). 

311To the extent any add-on charges are required 

by a dealership, and thus are not optional, such 

charges would have to be included in the offering 

price, pursuant to §§ 463.2(k) and 463.4(a). 

312See NPRM at 42044 (noting, in the definition 

of ‘‘Add-on List’’ at proposed § 463.2(b) that ‘‘[i]f 

the Add-on price varies, the disclosure must 

include the price range the typical consumer will 

pay instead of the price’’); see also Fed. Trade 

Comm’n v. Five-Star Auto Club, Inc., 97 F. Supp. 

2d 502, 528 (S.D.N.Y. 2000) (‘‘at the very least it 

would have been reasonable for consumers to have 

assumed that the promised rewards were achieved 

by the typical Five Star participant’’); Complaint 

¶¶ 28–50, Fed. Trade Comm’n v. Universal City 

Nissan, Inc., No. 2:16–cv–07329 (C.D. Cal. Sept. 29, 

2016) (alleging unlawful deception where a dealer’s 

ads list prominent terms not generally available to 

consumers, including where those terms are subject 

to various qualifications or restrictions); Complaint 

¶¶ 8–10, Progressive Chevrolet Co., No. C–4578 

(F.T.C. June 13, 2016) (alleging advertised offer was 

deceptive because the typical consumer would not 

qualify for the offer). 

313Working in tandem, proposed § 463.4(b)(1) 

and (2) would mean that dealers who engage in 

advertising and charge for optional add-ons must 

have a website, online service, or other mobile 

application by which to disclose an add-on list. 

Thompson Med. Co., Inc., 104 F.T.C. 

648, 817 (1984)); see also Fed. Trade 

Comm’n v. Crescent Pub. Grp., Inc., 129 

F. Supp. 2d 311, 321 (S.D.N.Y. 2001) 

(‘‘Information concerning prices or 

charges for goods or services is material, 

as it is ‘likely to affect a consumer’s 

choice of or conduct regarding a 

product.’ ’’).309

Thus, it is an unfair or deceptive act 

or practice for dealers to fail to disclose 

the offering price in an advertisement or 

other communication that references, 

expressly or by implication, a specific 

vehicle or any monetary amount or 

financing term for any vehicle. 

Furthermore, this provision also 

serves to prevent the misrepresentations 

prohibited by § 463.3—including 

misrepresentations regarding costs or 

add-ons—by requiring consumers to be 

told the true price of the vehicle in 

advertisements and other 

communications. It also helps prevent 

dealers from failing to obtain the 

express, informed consent of consumers 

for charges, as addressed by 

§ 463.5(c).310 Thus, the Commission is 

requiring dealers to disclose a vehicle’s 

offering price when advertising or 

otherwise communicating about a 

specific vehicle or monetary amount or 

financing term for any vehicle. This 

provision allows consumers to compare 

offers based on the same price terms and 

to select dealers that truly offer the 

lowest price rather than dealers that 

advertise deceptively low prices but 

charge more. When price information in 

the market is distorted or concealed— 

especially in document- and timeintensive vehicle transactions— 

consumers are unable to effectively 

differentiate between sellers, and sellers 

trying to deal honestly with consumers 

are put at a competitive disadvantage. 

For the foregoing reasons, and having 

considered the comments that it 

received on this proposed provision, the 

Commission is finalizing the offering 

price provision at § 463.4(a) with 

modifications to capitalize the defined 

term ‘‘Vehicle’’ in its singular, plural, 

and possessive forms, to correspond to 

the revised definition at § 463.2(e), and 

to add language clarifying that the 

provision is also prescribed for the 

purpose of preventing unfair or 

deceptive acts or practices defined in 

this Rule. The Commission is finalizing 

the corresponding ‘‘Offering Price’’ and 

‘‘Government Charges’’ definitions in 

§ 463.2 largely as proposed, with 

modifications to the ‘‘Offering Price’’ 

definition to conform with the defined 

term ‘‘Vehicle’’ and to clarify that 

dealers may, but need not, exclude 

required government charges from a 

vehicle’s offering price, and a 

typographical modification to the 

‘‘Government Charges’’ definition to 

include a serial comma for consistency. 

(b) Add-On List 

The Commission’s proposed add-on 

list disclosure provision (proposed 

§ 463.4(b)) required the disclosure, both 

online and at each dealership, of a list 

of all optional add-ons for which the 

dealer charges consumers and the price 

of each such add-on.311 As proposed, if 

the price of the add-on varies based on 

the specifics of the transaction, the addon list would have to include the range 

the typical consumer will pay.312 Due to 

space constraints, dealer advertisements 

presented not online but in another 

format—such as in print, radio, or 

television—would not be required to 

include the add-on list, disclosing 

instead the website, online service, or 

mobile application where consumers 

can access the add-on list.313

Many commenters, including 

consumer advocacy organizations, 

supported the proposal to require 

dealers to provide consumers with clear, 

accurate pricing information for add-on 

products or services altogether in one 

list. Some commenters raised concerns 

that, without significant modification, 

the Commission’s proposal to allow for 

the disclosure of price range 

information where the price of an addon varies based on the specifics of the 

transaction would allow for significant 

abuses, including by permitting dealers 

to disclose ranges so broad they would 

be meaningless. Such commenters urged 

the Commission to modify its definition 

of ‘‘Add-on List’’ to require, where a 

price range is listed for a given add-on, 

the add-on list further indicate the low, 

median, and high prices charged to 

consumers for each such add-on over 

the preceding two years; or that the 

Commission require dealers to create 

individualized add-on lists for each 

vehicle sold, containing one fixed, nonnegotiable price for each add-on. 

Relatedly, other commenters, including 

industry organizations, expressed 

concerns regarding the add-on list 

proposal, including that the proposal to 

allow for price range information was 

vague or confusing, and that certain 

aspects of the proposed definition, 

including the scope of add-ons covered, 

as well as the requirement to keep such 

add-on lists updated, would impose 

extensive economic burdens. 

After careful review of the comments, 

the Commission has determined not to 

finalize its proposed add-on list 

provision (proposed § 463.4(b)). Here, 

the Commission believes its proposal 

would benefit from further review and 

refinement. The Commission 

nevertheless emphasizes that, under 

existing law, dealers are prohibited from 

misrepresentations regarding material 

information about any costs, limitation, 

benefit, or any other aspect of an addon, and from charging for add-ons 

without obtaining the express, informed 

consent of the consumer—conduct 

which the Final Rule prohibits as well, 

including in §§ 463.3(b) and § 463.5(c). 

The Commission also emphasizes that, 

in addition to the Rule’s prohibitions, 

industry guidance and effective selfregulatory efforts can serve a role in 

helping prevent problematic dealer 

behavior in this area. The Commission 

will continue to monitor the motor 

vehicle marketplace for issues 

pertaining to add-ons and will consider 

implementing additional measures in 

the future if it determines such 

measures are warranted to address 

deceptive or unfair acts or practices 

related to add-on products or services. 

(c) Add-Ons Not Required 

For optional add-on products or 

services, the Commission’s proposed 

§ 463.4(c) required dealers to disclose, 

when making any representation about 


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314 Individual commenter, Doc. No. FTC–2022– 

0046–3693. 

315 Individual commenter, Doc. No. FTC–2022– 

0046–5268. 

316 Individual commenter, Doc. No. FTC–2022– 

0046–1365. 

317 Individual commenter, Doc. No. FTC–2022– 

0046–9883; see also Individual commenter, Doc. 

No. FTC–2002–0046–9632 (‘‘I was told that GAP 

insurance was required to be included. . . . I [later] 

contacted and asked for copies of my contracts. On 

September 5 [the dealer] sent me an email with a 

credit contract attached. I am including it here. It 

says my monthly payment is over $370. It also 

shows the cash price as close to $17,000.00. I can 

also see it says the GAP is optional. I never saw this 

contract. I never signed this contract.’’). 

318 Individual commenter, Doc. No. FTC–2022– 

0046–6816. 

319 In such cases, however, § 463.4(a) of the Final 

Rule requires these non-optional add-ons to be 

included in a vehicle’s offering price; if the dealer 

requires the consumer to pay for them, they are part 

of the full cash price for which a dealer will sell 

or finance the vehicle to any consumer. See SBP 

III.D.2(a). 

an optional add-on, that the add-on is 

not required and the consumer can 

purchase or lease the vehicle without 

the add-on. For the reasons discussed in 

the paragraphs that follow, the 

Commission is finalizing the required 

disclosure at § 463.4(c) largely as 

proposed. The Commission is 

capitalizing the defined term ‘‘Vehicle’’ 

to conform with the definition at 

§ 463.2(e). The Commission also is 

adding language to the end of § 463.4(c) 

clarifying that the requirements in 

§ 463.4(c) ‘‘also are prescribed for the 

purpose of preventing the unfair or 

deceptive acts or practices defined in 

this part, including those in §§ 463.3(a) 

and (b) and 463.5(c).’’ 

A number of commenters, including a 

group of State attorneys general, 

supported this proposed requirement, 

contending that unscrupulous dealers 

have exploited the vehicle sales process 

to saddle consumers with unwanted 

add-on products or services, and that 

such a disclosure would importantly 

help consumers avoid discovering these 

additional charges only after completing 

the purchase, assenting to them because 

they believed the add-ons to be required 

in order to purchase the vehicle, or 

paying for them unknowingly because 

they never uncovered the charges. Many 

individual commenters also stressed the 

need for add-on disclosure 

requirements. For example: 

• Salespeople such as myself are 

responsible for selling the car and all 

aftermarket/add-on products. This has 

put me in a unique position to see how 

these proposed regulations would 

impact automotive sales. I cannot stress 

enough my support for these new rules. 

. . . The payments calculated by 

management include add-ons, but the 

price of the add-ons and how they affect 

the payments are not shown. The addons ‘‘packed’’ in the first payment often 

include an extended warranty, GAP 

insurance, tire and wheel protection, an 

oil change package, a theft recovery 

device, and sometimes more depending 

on the situation.314

• Car buying is one of the most 

miserable consumer experiences in 

existence. Frankly, I’m disappointed 

that this issue hasn’t been addressed 

decades ago. It’s well past time that the 

deceptive practices that car dealers use 

to manipulate and take advantage of 

customers is made illegal. What other 

business can legally lie about the price 

of the product that they sell, and slip 

extra unwanted products into the deal 

that they don’t reveal and won’t remove 

upon request? These practices are 

arcane and unfair, especially 

considering the absurd cost of 

automobiles today. I wholeheartedly 

approve of what the proposed rules are 

attempting to accomplish. Please do not 

allow a powerful lobbying group to limit 

or change good legislation that benefits 

tens of millions of Americans who 

currently dread the car buying 

experience for far more reasons than just 

price.315

• . . . I am not against business 

making a profit, in fact most Americans 

understand businesses need to make 

money too, however most dealers will 

not disclose additional costs to the 

purchaser until it is time to sign 

paperwork for purchase. Rather than 

simply being upfront with what their 

desired price is and how much they 

make from the sale rather they are fed 

lines about ‘‘common practices’’, [sic] 

‘‘these are normal fees’’ or simply not 

being forthright about additional costs 

on items only installed on location at 

the dealerships to drive the price up. 

Even more insulting is when buyer[s] 

ask to have options removed from the 

vehicle dealers stall or flat out refuse to 

do so.316

• It is about time something like this 

is brought up. This will have no effect 

on the honest dealers out there. . . . 

This will really help the consumer. . . . 

We will be able to compare apples to 

apples. You won’t show up at the 

dealership with the lowest price only to 

find out that they have all these other 

fees that make them the least desirable 

of the choices. Also, adding stuff like 

pinstriping for large fees will come to an 

end. . . . I have no problem with a 

dealer making money. They are a 

business and have overhead. I have a 

problem when they try [to] gloss over 

everything they are trying to charge you 

for. This ruling needs to take effect. 

Anyone posting against it is someone 

working for a dealer. Like I mentioned 

before, if you are doing everything on 

the up and up, not only do you get good 

reviews and repeat business, but this 

ruling will not even effect [sic] you.317

• I also agree that Enhanced Informed 

Consent in F & I office is necessary. One 

of my cohort was almost coerced into 

non-equivalent decision-making 

scenarios in the finance office with their 

car purchases. The finance officer flat 

out ask[ed] them, ‘‘did you want the 2 

year, 30[,000] mile extended warrant[y], 

or the 4 year 50[,000] mile extended 

warranty?’’ The wife sat there and 

asked, ‘‘I’m confused. Do I HAVE to 

pick one of those?’’ Her husband said, 

‘‘No, he’s trying to trick you into buying 

one. You don’t need any at all.’’ They 

then promptly threatened to walk out 

and the finance manager came out and 

did their paperwork without further 

conflict.318

Several commenters offered support 

while also proposing that the 

Commission adopt additional measures 

to further ensure that consumers 

understand that optional add-ons are 

not required. One dealership group, for 

example, commenting in support of 

disclosures that optional add-ons are 

not required, recommended that dealers 

be required to include signage on their 

websites and in their showrooms or on 

their sales desks that set out both 

components of the Commission’s 

proposal: that add-ons are not required, 

and that consumers may purchase or 

lease the vehicle without add-ons. Other 

commenters, including a consumer 

protection agency and a consumer 

advocacy organization, suggested that 

the Commission modify the language in 

proposed § 463.4(c) to strike the ‘‘if 

true’’ language, asserting that all addons should be optional and not required 

to consummate the sale or lease of a 

vehicle. At least one individual 

commenter recommended that the 

Commission prohibit dealers from preinstalling add-ons. 

In response to these comments, the 

Commission notes that, were it to 

require signage stating, generally, that 

add-ons are optional, or to strike the ‘‘if 

true’’ language from this disclosure, it 

would cause consumers to be presented 

with information that may not be 

accurate in all circumstances. Some 

add-ons might already be installed on 

the vehicle or otherwise required by the 

dealer. As explained in SBP III.D.2(a) 

with regard to § 463.4(a), charges for 

such add-ons must be included in the 

vehicle’s offering price.319 In such cases, 

representing that add-ons are 

categorically optional would mislead 


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638 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

320See Rule Concerning Cooling-Off Period for 

Sales Made at Homes or at Certain Other Locations, 

16 CFR 429. 

321See, e.g., California Car Buyer’s Bill of Rights, 

Cal. Civ. Code 2981 (requiring dealers to provide a 

written list of specified items purchased and their 

effect on monthly payments, including GAP, theft 

deterrent devices, and surface protection products); 

Minn. Stat. 59D.06(b) (requiring any person offering 

a GAP waiver to disclose that the waiver is not 

required for a consumer to buy or lease the vehicle); 

Wash. Rev. Code. 48.160.050(9) (mandating that 

GAP waivers disclose that ‘‘neither the extension of 

credit, the terms of the credit, nor the terms of the 

related motor vehicle sale or lease, may be 

conditioned upon the purchase of the waiver.’’); La. 

Stat. Ann. 32:1261(A)(2)(a) (declaring it unlawful 

for a dealer to require, as a condition of sale and 

delivery, for a consumer to purchase ‘‘special 

features, appliances, accessories, or equipment not 

desired or requested by the purchaser.’’). 

the consumer. Relatedly, by requiring 

that charges for mandatory items be 

included in the vehicle’s offering price, 

the Final Rule allows dealers to 

customize the vehicles they are selling 

while protecting consumers by requiring 

dealers to disclose the offering price for 

such customized vehicles. Accordingly, 

the Commission declines to prohibit the 

practice of pre-installing add-ons in this 

Final Rule, but will continue to monitor 

the market to determine whether preinstalled add-ons require further 

regulation. At the same time, the 

Commission emphasizes that the 

protections contemplated here and 

elsewhere in this Final Rule prohibit 

dealers from obscuring price 

information and whether an add-on is 

optional, and further require dealers to 

obtain the express, informed consent of 

the consumer to charge a consumer for 

any add-on. 

Additionally, several commenters 

indicated their support for the 

Commission’s proposal while also 

recommending that the Commission 

consider further steps to protect 

consumers from deceptive or unfair 

practices pertaining to the inclusion of 

add-ons in consumer vehicle sales or 

leases. Some commenters, including a 

group of State attorneys general and a 

dealership association, requested that 

the Commission require dealers to 

disclose any mandatory add-ons and 

whether those add-ons are required in 

order to obtain financing, including by 

requiring such disclosure in an 

addendum sticker affixed to the motor 

vehicle. In response, the Commission 

notes that other provisions of the Final 

Rule prohibit misconduct in this area, 

including by requiring, at § 463.4(a), 

that charges for such add-ons must be 

included in the vehicle’s offering price. 

While consumers may benefit from 

repeated or additional disclosures, each 

additional disclosure requirement 

would increase both the cost to comply 

with the regulation and the risk of 

crowding out other important 

information. Given these risks, the 

Commission declines to include 

additional requirements regarding the 

content or form of its add-on disclosure 

at § 463.4(c). The Commission will 

continue to monitor the market to gather 

additional information on this issue and 

will consider whether to modify or 

expand this or other sections in the 

future based on stakeholder experience 

with this provision and whether it 

effectively halts unlawful conduct. 

Other commenters, including 

consumer advocacy organizations and 

consumer attorneys and advocates, 

urged the Commission to adopt a thirtyday ‘‘cooling-off’’ period for the sale of 

vehicle-related add-ons, similar to that 

required by the Commission for door-todoor and other off-premises sales,320

which would grant consumers time to 

review the paperwork after the 

transaction, and to cancel unexpected or 

otherwise unwanted add-ons for a full 

refund. As explained in greater detail in 

the discussion of § 463.5(c), in SBP 

III.E.2(c), the Commission also has 

determined not to include in this Final 

Rule a ‘‘cooling-off’’ period in which 

add-on products or services may be 

canceled. In this regard, the 

Commission would benefit from 

additional information, including the 

length of time needed for such ‘‘cooling 

off’’ rights to be effective. The 

Commission may consider revisiting 

this decision in the future based on 

actual stakeholder experience with the 

provisions of the Final Rule and 

whether they effectively halt unlawful 

conduct. 

Other commenters presented 

questions or critiques regarding this 

proposed disclosure. As with the 

Commission’s proposed disclosures 

generally, some commenters, including 

an industry association and a dealership 

association, contended that existing 

requirements in a number of States to 

disclose that add-ons are optional make 

Federal regulation in this area 

unnecessary or contradictory. As 

described in detail in SBP III.D.1, the 

Commission first observes that the 

functioning of such standards 

demonstrates the practicability of its 

proposed disclosure that add-ons are 

not required. To the extent a State 

requires additional disclosures 

regarding add-ons, nothing prevents 

dealers from providing those disclosures 

as well as those required under part 463 

so long as the State disclosures are not 

inconsistent with those required under 

part 463. To the extent there is truly an 

inconsistency between this part and 

State law, § 463.9 provides that part 463 

will govern, but only to the extent of the 

inconsistency, and only if the State 

statute, regulation, order, or 

interpretation affords consumers less 

protection than does the corresponding 

provision of this part. Finally, a number 

of States do not have existing standards 

in this area; in such States, the 

Commission’s disclosures operate as a 

key safeguard. 

Commenters, including dealership 

associations, argued that dealers would 

develop and use an additional form to 

demonstrate compliance with this 

disclosure requirement, thereby 

burdening the vehicle sales and delivery 

process. The Commission begins by 

noting that any such steps are not 

required by part 463; on the contrary, 

the Commission structured this 

disclosure to provide dealers with 

flexibility, within the bounds of the law, 

to provide this essential information in 

a manner that is clear and conspicuous 

under the particular circumstances of 

their transactions. This requirement 

does not require a complex or lengthy 

disclosure, is based on similar 

provisions already in operation in 

certain States,321 and for dealers already 

disclosing accurate add-on information, 

this provision requires no significant 

additional burden. 

When making a representation about 

an add-on product or service, the failure 

to disclose that the add-on is not 

required and the consumer can 

purchase or lease the vehicle without 

the add-on, if true, is likely to cause 

substantial injury to consumers who 

end up paying more for a vehicle sales 

or lease transaction than they expected 

by being subject to charges of which 

they are not aware or which they believe 

are required because they were never 

told they could decline the charges. 

Absent this information, consumers 

cannot reasonably avoid the injury of 

being charged for these products 

because they are not aware that they 

have an option to begin with. When 

consumers are presented with motor 

vehicle transaction documents that 

include a variety of charges, it is 

difficult to detect any charges that are 

added to the contract beyond those that 

are required or have been agreed upon, 

especially in a stack of lengthy, 

complex, highly technical, and often 

pre-populated documents, at the close 

of a long sales, financing or leasing 

process after an already-lengthy process 

of selecting the vehicle and negotiating 

over its price or payment terms. 

Consumers cannot reasonably avoid 

charges of which they are unaware, or 

regarding which they do not know they 

have a choice. 


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Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 639 

322See Nat’l Auto. Dealers Ass’n et al., 

‘‘Voluntary Protection Products: A Model 

Dealership Policy’’ 4 (2019), https://www.nada.org/ 

regulatory-compliance/voluntary-protectionproducts-model-dealership-policy (stating 

dealerships should ‘‘prominently display to 

customers a poster stating that [add-on products or 

services] offered by the dealership are optional and 

are not required to purchase or lease a vehicle or 

obtain warranty coverage, financing, financing on 

particular terms, or any other product or service 

offered by the dealership. . . .’’). 

323See, e.g., Fed. Trade Comm’n. v. Windward 

Mktg., Inc., 1997 WL 33642380, at *10 (N.D. Ga. 

Sept. 30, 1997)) (‘‘[A]ny representations concerning 

the price of a product or service are presumptively 

material.’’); Thompson Med. Co., Inc., 104 F.T.C. 

648, 817 (1984); see also Fed. Trade Comm’n v. 

Crescent Pub. Grp., Inc., 129 F. Supp. 2d 311, 321 

(S.D.N.Y. 2001) (‘‘Information concerning prices or 

charges for goods or services is material, as it is 

‘likely to affect a consumer’s choice of or conduct 

regarding a product.’ ’’). 

324See 15 U.S.C. 57a(a)(1)(B) (the Commission 

‘‘may include requirements prescribed for the 

purpose of preventing’’ unfair or deceptive acts or 

practices). 

325 Individual commenter, Doc. No. FTC–2022– 

0046–1216. 

326 Individual commenter, Doc. No. FTC–2022– 

0046–3693. 

The injury to consumers from a lack 

of information about add-on optionality 

is not outweighed by benefits to 

consumers or competition from 

withholding this basic information. 

Instead, information about the optional 

nature of these products or services 

protects consumers from lost time and 

effort, supracompetitive transaction 

costs, and unexpected charges while 

increasing competition among dealers, 

who are able to compete on truthful, 

standard terms. Moreover, the cost of 

providing this threshold information is 

minimal, especially when compared to 

the injury to consumers, and providing 

such information is consistent with 

existing industry guidance.322

This provision addresses deceptive 

conduct as well. Throughout the lengthy 

vehicle sales, financing, or leasing 

process, dealers often discuss various 

different charges at various different 

times. Such charges include charges the 

government requires the consumers to 

pay and financing costs. Dealers then 

often present consumers a total amount 

to pay that differs from the advertised or 

sticker price. Given that some additional 

charges are required, if a dealer also 

discusses charges for items that are not 

required, such as optional add-ons, it is 

reasonable for consumers to believe that 

charges for such items are required. In 

the course of a lengthy transaction 

involving extensive negotiations, 

dealers can obscure such products and 

their associated charges in dense 

paperwork. Moreover, the omitted 

information is highly material: if 

consumers knew that a particular 

optional add-on was not required to 

purchase the vehicle, it would likely 

affect their choice about whether to 

purchase the add-on.323

Thus, it is an unfair or deceptive act 

or practice for dealers to fail to disclose, 

when making a representation about an 

add-on product or service, that the addon is not required and the consumer can 

purchase or lease the vehicle without 

the add-on, if true. Further, this 

provision also serves to prevent the 

misrepresentations prohibited by 

§ 463.3—including misrepresentations 

regarding material information about the 

costs or terms of purchasing, financing, 

or leasing a vehicle, or about any costs, 

limitations, benefits, or any other aspect 

of an add-on—by requiring consumers 

to be told whether represented add-ons 

are optional. It also helps prevent 

dealers from failing to obtain the 

express, informed consent of the 

consumer for charges, as addressed by 

§ 463.5(c).324 Thus, the Commission is 

requiring dealers to disclose, when 

making representations about add-ons, 

that the add-ons are not required and 

the consumer can purchase or lease the 

vehicle without the add-ons, if true. 

For the foregoing reasons, and having 

considered all of the comments that it 

received on this proposal, the 

Commission is finalizing the required 

disclosure at § 463.4(c) largely as 

proposed, with the minor modifications 

of capitalizing the defined term 

‘‘Vehicle’’ and clarifying that the 

requirements of § 463.4(c) also are 

‘‘prescribed for the purpose of 

preventing the unfair or deceptive acts 

or practices defined in this part, 

including those in §§ 463.3(a) and (b) 

and 463.5(c).’’ 

(d) Total of Payments and Consideration 

for a Financed or Lease Transaction 

Section 463.4(d) of the Commission’s 

proposed rule required dealers, when 

making any representation about a 

monthly payment for any vehicle, to 

disclose the total amount the consumer 

will pay to purchase or lease the vehicle 

at that monthly payment after making 

all payments as scheduled. If the total 

amount disclosed assumes the 

consumer will provide consideration, 

the proposed rule required dealers to 

disclose the amount of consideration to 

be provided by the consumer. For the 

reasons discussed in the following 

paragraphs, the Commission is 

finalizing the required disclosure at 

§ 463.4(d) largely as proposed. The 

Commission is capitalizing the defined 

term ‘‘Vehicle’’ to conform with the 

definition at § 463.2(e), and making the 

minor grammatical correction of 

replacing the semicolon and the word 

‘‘and’’ at the end of § 463.4(d)(1) with a 

period. The Commission also is adding 

language to the end of § 463.4(d), at 

newly designated (d)(3), clarifying that 

the requirements in § 463.4(d) ‘‘also are 

prescribed for the purpose of preventing 

the unfair or deceptive acts or practices 

defined in this part, including those in 

§§ 463.3(a) and 463.5(c).’’ 

A number of commenters, including 

consumer advocacy organizations, 

supported this proposed requirement, 

contending it would provide essential 

information to the consumer while not 

contributing to information overload, 

and noting the information to be 

disclosed would have been calculated 

by the dealer in the process of 

determining the proposed monthly 

payment. Many individual commenters 

also stressed the need for the 

Commission’s proposal: 

• Small businesses are a cornerstone 

of our economy. Automotive dealers, 

like other retailers, deserve to make a 

reasonable profit in order to maintain 

their physical plants, to purchase 

inventory, and to pay their staff. That 

being said, some auto dealers have for 

years used misleading and often outand-out deceptive sales tactics (i.e., lies) 

to generate sales. . . . Sometimes the 

unwary consumer may not even realize 

that the actual price differs from the 

quoted price, because the automobile 

finance agent speaks only in terms of 

monthly payments rather than the total 

cost. The consumer may not even 

realize that he or she has been ‘‘taken’’ 

until a friend with an amortization table 

runs the numbers.325

• At most dealerships, including the 

one I work at, when a customer asks to 

see figures on a car after a test drive, 

management goes out of their way to 

make sure the customer only sees the 

monthly payment. The typical numbers 

presented to the customer initially show 

the price of the car, the trade-in value, 

the down payment, and the monthly 

payment options in bold numbers at the 

bottom. The payments calculated by 

management include add-ons, but the 

price of the add-ons and how they affect 

the payments are not shown. . . . 

Compounding this issue of hidden addons is that salespeople are instructed to 

figure out the customer’s budget 

beforehand (e.g., $450 per month). If the 

monthly payment with the car and addons comes out to be less than $450 per 

month, management will often raise the 

price of the add-ons to get the payment 

to $450 or even slightly above.326

• I wholeheartedly support the 

proposed regulation changes for car 

dealerships and the car buying process. 


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640 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

327 Individual commenter, Doc. No. FTC–2022– 

0046–5567. 

328 Individual commenter, Doc. No. FTC–2022– 

0046–2176. 

329 Individual commenter, Doc. No. FTC–2022– 

0046–4034. 

330 Individual commenter, Doc. No. FTC–2022– 

0046–4911. 

331 Individual commenter, Doc. No. FTC–2022– 

0046–5958. 

332 Individual commenter, Doc. No. FTC–2022– 

0046–8847. 

333 Individual commenter, Doc. No. FTC–2022– 

0046–6405. 

334 Individual commenter, Doc. No. FTC–2022– 

0046–3860. 

335 Individual commenter, Doc. No. FTC–2022– 

046–9469 at 6–7. 

336See, e.g., Writing, Black’s Law Dictionary (11th 

ed. 2019) (defining ‘‘writing’’ as ‘‘[a]ny intentional 

recording of words in a visual form, whether in 

handwriting, printing, typewriting, or any other 

tangible form that may be viewed or heard with or 

without mechanical aids.’’); cf. Fed. R. Evid. 1001(a) 

(defining ‘‘writing’’ as letters, words, numbers, or 

their equivalent set down in any form’’). 

337These association commenters made these 

contentions regarding the monthly payment 

disclosures at both § 463.4(d) and (e). The 

Commission responds to these contentions in this 

section. 

338One industry commenter, in expressing 

concern that § 463.4(d) and (e) may conflict with 

Regulations Z and M, questioned whether the FTC 

coordinated with the Federal Reserve Board. 

Several Senators similarly questioned whether the 

FTC consulted with the Federal Reserve Board, 

CFPB, or other agencies. Although the Commission 

cannot comment on specific interactions, it 

coordinates regularly with other Federal agencies, 

including the Federal Reserve Board and the CFPB. 

339See 12 CFR 1026.24(b), (d)(2)(ii). 

340See 12 CFR 1013.7(b), (d)(2)(iii). 

As an average consumer who has bought 

3 vehicles with financing and 2 without, 

I can see the obvious benefit these 

proposed regulations would have on the 

car buying process. The vast quantities 

of paperwork and add [-]ons make it 

easy for car dealers to switch things 

around to their benefit. I had one 

dealership . . . change the term of my 

auto loan from 72 to 84 months in the 

middle of reprinting the final sales sheet 

because of another obvious error in the 

first copy. In the midst of all the 

distractions and misdirection going on, 

[I] didn’t notice [‘]til[l] after the fact. I 

felt powerless and cheated. . . .327

• There is no reason that buying a car 

has to be a chore and so ambiguous on 

price. The dealer was also so twisted up 

on getting me to focus on the monthly 

payment and not the total price of the 

car and that is where they were able to 

sneak the price up. Practices like this 

are also why people have such a disdain 

for purchasing a new/used car.328

• I have experienced many of the 

‘‘typical’’ tactics that one hears about 

when negotiati[ng] with an automobile 

dealership, like the salesperson always 

wanting to talk about the monthly 

payment and never the actual trade-in 

price and sales price. . . . I agree that 

the whole car buying process could be 

made easier and I see no reasons that 

any fair and honest car dealership 

would object to these proposed changes/ 

rules as they, in my estimation are all 

things that a fair and honest car dealer 

should be doing anyway. The only car 

dealers that should be objecting to these 

new rules should be the unscrupulous 

dealers.329

• When buying a car dealers try to 

negotiate the monthly payment, so the 

actual total cost is hidden from the 

buyer until they get into the ‘‘financing 

office’’ where all kinds of unexpected 

add-ons are sprung on the consumer.330

• I am trying to buy a new car, from 

the factory, with no modifications or 

alterations, is it so much to ask for? The 

process of figuring out the price of the 

car is impossible. The sales people are 

all about the monthly payment, when I 

asked them what the car price is the 

answer is always what payment are you 

looking for.331

• They only want to gain the amount 

you can be ‘‘comfortable’’ on your 

monthly payment so that they can 

stretch out the term and hammer you 

with hidden fees and other expenses 

you won[’]t be able to see right away.332

• Dealerships always want you to 

come in so they can manipulate you 

into a car you can[’]t afford and pay for 

things you don’t need by hiding them in 

a monthly payment.333

• If we had to do our grocery 

shopping the same way dealers want us 

to buy a car, most Americans would 

starve before sunset. ‘‘What kind of 

monthly payment are you looking for in 

a banana?’’ is a conversation I should 

never be forced to have. . . .334

One individual commenter requested 

that the Commission make clear that 

handwritten negotiation notes made by 

a dealer would trigger the requirement 

that this proposed disclosure be made in 

writing.335 In response, the Commission 

affirms such representations have been 

made ‘‘in writing,’’ 336 and thus, where 

dealers represent a monthly payment in 

such notes, this provision requires them 

to provide the disclosures in § 463.4(d) 

in writing. 

Other commenters, including industry 

associations and individual 

commenters, questioned whether the 

proposal would require a disclosure in 

every place a monthly payment appears 

on a dealer’s website, or otherwise 

would be difficult or infeasible given 

the frequency with which dealers 

provide consumers with monthly 

payment information, suggesting that 

such a requirement could either 

overwhelm consumers or dissuade 

dealers from providing monthly 

payment information, or arguing 337 that 

the proposal overlapped with other laws 

such as the Truth in Lending Act or the 

Consumer Leasing Act. Regarding 

monthly payment amounts appearing 

more than once or in multiple places, 

the Commission notes that, as proposed, 

this section would require disclosure of 

the total purchase or lease amount for a 

vehicle including any assumed 

consumer-provided consideration, and 

only when making a representation 

about the vehicle’s monthly payment 

amount; it would not require a complex 

or lengthy disclosure. Consumers shop 

for vehicles and interact with online 

interfaces, and other advertising in 

many different ways; thus, it is 

important for this simple disclosure to 

accompany a monthly payment 

representation however a consumer 

might encounter it. Moreover, the 

Commission has taken into account 

existing disclosure obligations.338

Monthly payment amounts for motor 

vehicle sales or leases constitute socalled ‘‘triggering terms’’ under the 

Truth in Lending Act, the Consumer 

Leasing Act, and their implementing 

Regulations Z and M. As such, dealers 

currently providing such information, 

including on their websites or other 

online interfaces, are bound by existing 

laws that require providing consumers 

with additional terms in a clear and 

conspicuous way: in the case of vehicle 

credit transaction offers, this includes 

the terms of repayment, which reflect 

the repayment obligations over the full 

term of the loan; 339 in the case of 

vehicle lease offers, this includes the 

number, amounts, and due dates or 

periods of scheduled payments under 

the lease.340 The Commission’s 

disclosure requirement takes into 

account these existing obligations, 

requiring, specifically: the total amount 

the consumer will pay to purchase or 

lease the vehicle at a represented 

monthly payment amount including any 

assumed consumer-provided 

consideration. Similarly, regarding the 

feasibility of providing this disclosure 

as often as dealers provide consumers 

with monthly payment information: 

once dealers choose to make a 

representation about a monthly 

payment, they are capable of disclosing 

a total of payments for the consumer 

based on the same inputs needed to 

arrive at that voluntary monthly 

payment representation. 

The Commission further notes that, in 

the event a monthly payment is already 

being disclosed, the associated total of 

payment would be calculated with the 

same financing or leasing estimates used 


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341As is currently the case under Federal law and 

the Final Rule, the terms must be the terms 

available to the typical consumer. See, e.g., Fed. 

Trade Comm’n v. Five Star Auto Club, 97 F. Supp. 

2d 502, 528 (S.D.N.Y. 2000) (‘‘[A]t the very least it 

would have been reasonable for consumers to have 

assumed that the promised rewards were achieved 

by the typical Five Star participant.’’). This is 

consistent with prior FTC enforcement actions. See, 

e.g., Complaint ¶¶ 48–53, 82–84, Fed. Trade 

Comm’n v. Universal City Nissan, Inc., No. 2:16– 

cv–07329 (C.D. Cal. Sept. 29, 2016) (alleging 

unlawful deception where a dealer’s advertisements 

list prominent terms not generally available to 

consumers, including where those terms are subject 

to various qualifications or restrictions); Complaint 

¶¶ 8–10, Progressive Chevrolet Co., No. C–4578 

(F.T.C. June 13, 2016) (alleging advertised offer was 

deceptive because the typical consumer would not 

qualify for the offer). 

342One commenter requested clarification or 

deletion of ‘‘any,’’ ‘‘by implication’’ and 

‘‘indirectly’’ from § 463.4(c) and (e) for the same 

reasons it articulated with regard to § 463.4(d): that 

the terms are too vague. The explanation provided 

in the text pertains to these sections as well. 

343The FTC Policy Statement on Deception and 

FTC cases make clear that both express and implied 

claims can be deceptive. See, e.g., ECM Biofilms, 

Inc. v. Fed. Trade Comm’n, 851 F.3d 599 (6th Cir. 

2017) (affirming Commission’s finding that an 

additive manufacturer’s unqualified 

biodegradability claim conveyed an implied claim 

that its plastic would completely biodegrade within 

five years); POM Wonderful LLC, Doc. No. C–9344 

(F.T.C. Jan. 10, 2013) (Opinion of the Commission), 

generally aff’d by POM Wonderful, LLC v. Fed. 

Trade Comm’n, 777 F.3d 478 (D.C. Cir. 2015) 

(finding that company’s advertisements would 

reasonably be interpreted by consumers to contain 

an implied claim that POM products treat, prevent, 

or reduce the risk of certain health conditions and 

for some ads that these effects were clinically 

proven); Kraft, Inc. v. Fed. Trade Comm’n, 970 F.2d 

311 (7th Cir. 1992) (affirming finding of deception 

where Kraft advertisements juxtaposed references to 

the milk contained in Kraft singles and the calcium 

content of the milk, the combination of which 

implied that each Kraft single contained the same 

amount of calcium as five ounces of milk). Further, 

to be considered reasonable, the interpretation or 

reaction does not have to be the only one; when a 

seller’s representation conveys more than one 

meaning to reasonable consumers, one of which is 

false, the seller is liable for the misleading 

interpretation. See FTC Policy Statement on 

Deception, supra note 42, at 3. Further, an 

interpretation will be presumed reasonable if it is 

the one the respondent intended to convey. Id. 

344See, e.g., Telemarketing Sales Rule, 16 CFR 

310.3(a)(2) (prohibiting ‘‘[m]isrepresenting, directly 

or by implication, in the sale of goods or services’’ 

a list of ten categories of material information); 16 

CFR 310.2(o) (defining ‘‘debt relief service’’ as any 

program or service ‘‘represented, directly or by 

implication, to renegotiate, settle, or in any way 

alter’’ certain terms); 16 CFR 310.5(a)(2) (requiring 

telemarketers to keep records of certain prize and 

prize-recipient information ‘‘for prizes that are 

represented, directly or by implication, to have a 

value of $25.00 or more’’); Business Opportunity 

Rule, 16 CFR 437.1(c) (defining a ‘‘(b)usiness 

opportunity’’ as a commercial arrangement in 

which, among other criteria, ‘‘[t]he seller, expressly 

or by implication, orally or in writing, represents 

that’’ it will provide, inter alia, business locations, 

outlets, accounts, or customers); Disclosure 

Requirements and Prohibitions Concerning 

Franchising, 16 CFR 436.1(e) (defining ‘‘(f)inancial 

performance representation’’ as any representation 

to a prospective franchisee that states, ‘‘expressly or 

by implication, a specific level or range’’ of sales, 

income, or profits); Military Credit Monitoring Rule, 

16 CFR 609.3(e) (describing as prohibited materials 

those that ‘‘expressly or by implication’’ represent 

certain ‘‘interfering, detracting, inconsistent, and/or 

undermining’’ information); Rules and Regulations 

Under Fur Products Labeling Act, 16 CFR 301.14 

(requiring an ‘‘unknown’’ origin disclosure when 

‘‘no representations are made directly or by 

implication’’ regarding the origin of used furs); 16 

CFR 301.18 (regulating the ‘‘passing off’’ of 

domestic furs as imported by prohibiting labeling, 

invoicing, or advertising that ‘‘represent[s] directly 

or by implication’’ that such furs have been 

imported); 16 CFR 301.43 (regulating the use of 

deceptive trade or corporate names by prohibiting 

any ‘‘representation which misrepresents directly or 

by implication’’ certain information); Power Output 

Claims for Amplifiers Utilized in Home 

Entertainment Products, 16 CFR 432.1(a) (defining 

the regulation’s scope when certain amplifier 

features or characteristics are ‘‘represented, either 

expressly or by implication, in connection with the 

advertising, sale, or offering for sale’’). 

345See FTC Policy Statement on Deception, supra 

note 42, at 2. 

346 12 CFR 1026.24(d) (emphasis added). 

347 12 CFR 1013.7(d) (emphasis added). 

348See, e.g., Business Opportunity Rule, 16 CFR 

437.6 (prohibiting ‘‘any seller, directly or indirectly 

through a third party’’ from engaging in certain 

prohibited practices); Credit Practices Rule, 16 CFR 

444.2 (prohibiting as unfair ‘‘a lender or retail 

installment seller directly or indirectly’’ taking or 

receiving certain obligations from a consumer); 16 

CFR 444.3 (prohibiting as deceptive ‘‘a lender or 

retail installment seller, directly or indirectly’’ 

misrepresenting cosigner liability, and prohibiting 

as unfair ‘‘a lender or retail installment seller, 

directly or indirectly’’ obligating a cosigner under 

certain circumstances); 16 CFR 444.4 (prohibiting as 

unfair the act or practice of ‘‘a creditor, directly or 

indirectly’’ levying or collecting certain late 

charges); Telemarketing Sales Rule, 16 CFR 

310.3(a)(3) (prohibiting as deceptive the act or 

practice of ‘‘[c]ausing billing information to be 

submitted for payment, or collecting or attempting 

Continued 

to calculate the monthly payment. 

Dealers already must be prepared to 

calculate such a total to satisfy their 

obligations under TILA, the CLA, or 

their implementing regulations.341

Regarding § 463.4(d)’s similarity to 

existing laws, as discussed previously, 

this provision is indeed consistent with 

other laws, and commenters have not 

indicated how providing truthful 

information about total payment 

amounts along with information they 

already provide about monthly payment 

amounts would unduly burden them or 

harm consumers, or how providing such 

information in writing before providing 

consumers with the contract, if they are 

already providing monthly payment 

information in writing prior to the 

contract, would do so. 

Some dealership associations 

described certain elements of the 

proposal as vague or unclear, requesting 

that the Commission clarify its use of 

the term ‘‘by implication’’ with regard to 

a monthly payment, or alternatively, 

that the Commission omit the terms 

‘‘any’’ (as it pertains to ‘‘any 

representation’’), ‘‘by implication,’’ and 

‘‘indirectly’’ from the proposed 

disclosure provision.342 Regarding the 

use of the term ‘‘by implication’’ with 

regard to a monthly payment, as 

discussed in the section-by-section 

analysis of § 463.3 in SBP III.C with 

respect to the prohibition on express or 

implied misrepresentations, the 

Commission notes that such language is 

consistent with longstanding law, and 

given that representations can mislead 

reasonable consumers even without 

making express claims, the provision 

could be rendered meaningless without 

it.343 Variations of the phrase ‘‘expressly 

or by implication’’ appear frequently in 

existing Commission guides and 

regulations,344 and implied claims are 

treated extensively in the longstanding 

FTC Policy Statement on Deception, 

which the Commission issued in 1983 

to provide guidance to the public on the 

meaning of deception.345 Furthermore, 

this language serves to help ensure that 

dealers may not avoid this disclosure 

requirement by making only implied 

reference to monthly payments, 

including by referring to a monthly 

payment amount that is not explicitly 

identified as such, or by referring to a 

regular periodic payment made on a 

different installment basis (e.g., a 

biweekly payment) to indirectly 

illustrate a consumer’s monthly 

payment obligations. 

These same reasons also counsel 

against deleting the terms ‘‘any’’ and 

‘‘indirectly’’ from this proposed 

disclosure provision. To begin, one 

dealership association commenter 

suggested deleting these terms from the 

regulatory text, but did not explain the 

nature of its specific concern regarding 

its use of the term ‘‘any,’’ instead 

claiming generally that the terms with 

which the commenter took issue were 

‘‘broad,’’ ‘‘vague,’’ and ‘‘imprecise.’’ As 

proposed, the Commission’s total 

payments disclosure would be required 

when a dealer makes ‘‘any 

representation . . . about a monthly 

payment for any vehicle.’’ These 

disclosure circumstances are markedly 

similar to those under Regulation Z and 

Regulation M: Regulation Z requires the 

disclosure of additional payment terms 

when ‘‘any’’ of a number of terms is set 

forth, including ‘‘[t]he amount of any 

payment’’; 346 Regulation M similarly 

requires the disclosure of additional 

terms when ‘‘any’’ of a number of items 

is stated, including ‘‘[t]he amount of any 

payment.’’ 347 The use of the term ‘‘any’’ 

is consistent with existing law, and thus 

is not confusing or impracticable. 

Furthermore, as with representations 

made ‘‘by implication,’’ the Commission 

has a longstanding practice of regulating 

representations made ‘‘indirectly’’ in the 

same manner as those made directly,348


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to collect payment for goods or services or a 

charitable contribution, directly or indirectly’’ 

without express verifiable authorization); 16 CFR 

310.4(a)(7) (prohibiting as abusive the act or 

practice of ‘‘[c]ausing billing information to be 

submitted for payment, directly or indirectly, 

without the express informed consent of the 

customer or donor’’); Mail, internet, or Telephone 

Order Merchandise Rule, 16 CFR 435.1(f) (defining 

‘‘Telephone’’ as ‘‘any direct or indirect use of the 

telephone to order merchandise. . . .’’); 

Preservation of Consumers’ Claims and Defenses, 16 

CFR 433.2 (prohibiting as an unfair or deceptive act 

or practice ‘‘for a seller, directly or indirectly’’ to 

take or receive a consumer credit contract which 

does not contain the Commission’s ‘‘Holder Rule’’ 

provision); Prohibition of Energy Market 

Manipulation Rule, 16 CFR 317.3 (declaring ‘‘[i]t 

shall be unlawful for any person, directly or 

indirectly’’ to engage in certain energy market 

manipulation practices); Trade Regulation Rule 

Pursuant to the Telephone Disclosure and Dispute 

Resolution Act of 1992, 16 CFR 308.7(i) (declaring 

that regulated persons may not ‘‘report or threaten 

directly or indirectly to report adverse information’’ 

on a consumer report under certain circumstances). 

349 Importantly, as is the case under current law, 

a dealer may not mislead the consumer about the 

likelihood of qualifying for any particular credit or 

leasing terms in the course of providing this 

disclosure. Generally speaking, such deception is 

less likely where the dealer communicates to the 

consumer any assumptions it may have made, along 

with the basis for any such assumptions, in a 

manner in which the consumer understands this 

information. 

350Buckle Up, supra note 63, at 7. 

351Consumer Fin. Prot. Bureau, ‘‘Quarterly 

Consumer Credit Trends: Growth in Longer-Term 

Auto Loans’’ 7–8 (Nov. 2017), https://files.consumer

finance.gov/f/documents/cfpb_consumer-credittrends_longer-term-auto-loans_2017Q2.pdf; see also 

Zhengfeng Guo et al., Off. of the Comptroller of the 

Currency, ‘‘A Puzzle in the Relation Between Risk 

and Pricing of Long-Term Auto Loans’’ 2, 4–5, 20 

(June 2020), https://www.occ.gov/publications-andresources/publications/economics/working-papersbanking-perf-reg/pub-econ-working-paper-puzzlelong-term-auto-loans.pdf (finding motor vehicle 

financing with six-plus-year terms have higher 

default rates than shorter-term financing during 

each year of their lifetimes, after controlling for 

borrower and loan-level risk factors). 

352See Auto Buyer Study, supra note 25, at 14 

(‘‘[T]he dealer can extend the maturity of the 

financing to reduce the effect of the add-on on the 

monthly payment, obscuring the total cost of the 

add-on’’); Auto Buyer Study: Appendix, supra note 

66, at 229, 233 (Study participant 457481) 

(dealership pitching add-ons at the end of the 

negotiation, and in terms of consumer’s monthly 

price); Auto Buyer Study: Appendix, supra note 66, 

at 701 (Study participant 437175) (dealership 

pitching add-ons in terms of monthly price); see 

also Complaint ¶¶ 12–19, Fed. Trade Comm’n v. 

Liberty Chevrolet, Inc., No. 1:20–cv–03945 (S.D.N.Y. 

May 21, 2020) (alleging dealership included 

deceptive and unauthorized add-on charges in 

consumers’ transactions); Complaint ¶¶ 21–28, Fed. 

Trade Comm’n v. Ramey Motors, No. 1:14–cv– 

29603 (S.D. W. Va. Dec. 11, 2014) (alleging dealer 

emphasized attractive terms such as low monthly 

payments but concealed substantial cash down 

payments or trade-in requirements); Complaint 

¶¶ 38–46, Fed. Trade Comm’n v. Billion Auto, Inc., 

No. 5:14–cv–04118–MWB (N.D. Iowa Dec. 11, 2014) 

(alleging dealer touted attractive terms such as low 

monthly payments but concealed significant extra 

costs). 

353See, e.g., Fed. Trade Comm’n v. Windward 

Mktg., Inc., No. Civ.A. 1:96–CV–615F, 1997 WL 

33642380, at *10 (N.D. Ga. Sept. 30, 1997) (‘‘[A]ny 

representations concerning the price of a product or 

service are presumptively material.’’); Removatron 

Int’l Corp., 111 F.T.C. 206, 309 (1988) (‘‘The 

Commission presumes as material express claims 

and implied claims pertaining to a product’s . . . 

cost.’’ (citing Thompson Med. Co., Inc., 104 F.T.C. 

648, 817 (1984)). 

and it does so to help ensure that its 

requirements are effective and not easily 

avoided. The Commission thus declines 

to modify their usage in § 463.4(d). 

Some commenters, including a 

dealership association, questioned 

whether the disclosure requirement 

would require dealers to obtain 

individuals’ consumer reports before 

providing monthly payment 

information. In response, the 

Commission notes that § 463.4(d) does 

not alter the status quo regarding the 

information a dealer must have in order 

to represent a monthly payment 

amount. As previously discussed, this 

provision does not require disclosure of 

a monthly payment; instead, if a dealer 

chooses to represent a monthly payment 

amount, § 463.4(d) requires a 

corresponding disclosure of ‘‘the total 

amount the consumer will pay to 

purchase or lease the vehicle at that 

monthly payment.’’ As previously 

explained in detail, dealers are capable 

of disclosing a total of payments for the 

consumer based on such voluntary 

monthly payment representations. 

Furthermore, to the extent a dealer may 

be providing consumers with estimated 

monthly payment information, the 

dealer may use the same assumptions 

used for estimating the monthly 

payment in order to determine the total 

of payments. Further, as is required 

under other law and this Rule, the 

dealer must refrain from deception, 

including by avoiding assumptions that 

the consumer would not reasonably 

expect or for which the consumer would 

not reasonably qualify.349

When making a representation, 

expressly or by implication, directly or 

indirectly, about a monthly payment for 

any vehicle, the failure to disclose the 

total amount the consumer will pay, 

inclusive of any consideration, to 

purchase or lease the vehicle at that 

monthly payment after making all 

payments as scheduled is likely to cause 

substantial injury to consumers who 

waste time and effort pursuing offers 

that are not actually available at 

reasonably expected terms; or who pay 

more for a vehicle sales or lease 

transaction than they expected by being 

subject to hidden charges or an 

unexpected down payment or trade-in 

requirement; or who are subject to the 

higher financing or leasing costs and 

greater risk of default associated with an 

unexpectedly lengthy loan or lease term. 

Moreover, when a consumer pays for his 

or her vehicle over a longer period of 

time, there is an increased likelihood 

that negative equity will result when the 

consumer needs or wants to purchase or 

lease another vehicle, because a 

vehicle’s value tends to decline faster 

than the amount owed.350 Longer motor 

vehicle financing term lengths also have 

higher rates of default, potentially 

posing greater risks to both borrowers 

and financing companies.351 Even if a 

consumer eventually learns the true 

total payment, or later learns that the 

terms being discussed are based on a 

previously undisclosed requirement that 

the consumer provide consideration, 

such as a down payment, the consumer 

cannot recover the time spent pursuing 

the offer that the consumer had 

expected. 

The injury caused by the failure to 

disclose the total amount and 

consideration is not reasonably 

avoidable. As the Commission has 

observed previously, withholding total 

payment information enables dealers to 

focus consumers on the monthly 

payment amount in isolation. Under 

such circumstances, dealers may add 

unwanted, undisclosed, or even 

fictitious add-on charges more easily, 

since consumers may not notice the 

relatively small changes an add-on 

charge makes when secreted within a 

monthly vehicle payment, despite the 

fact that such hidden charges can cost 

a consumer more than a thousand 

dollars over the course of an auto 

financing or lease term.352 The absence 

of information concerning the total of 

payments—which is within the sole 

control of the dealership—also enables 

dealers to use claims regarding monthly 

payment amounts to falsely imply 

savings or parity between different 

offers where reduced monthly payments 

increase the total vehicle cost due to an 

increased payment term or annual 

percentage rate. 

The injury to consumers from a lack 

of total payment information is not 

outweighed by benefits to consumers or 

competition from withholding this basic 

information. Instead, the burden of 

disclosing this information—which the 

dealer determines and can calculate 

upfront—is minimal for dealers who are 

already making representations about a 

monthly payment for a vehicle, 

especially when compared to the injury 

to consumers. 

Regarding deception, as detailed in 

the NPRM and in this SBP, cost is one 

of the most material pieces of 

information for a consumer in making 

an informed purchasing decision.353 Yet 

it can be difficult for consumers to 

uncover the actual costs, and their 


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354See 15 U.S.C. 57a(a)(1)(B) (the Commission 

‘‘may include requirements prescribed for the 

purpose of preventing’’ unfair or deceptive acts or 

practices). 

355 Individual commenter, Doc. No. FTC–2022– 

0046–0141. 

356 Individual commenter, Doc. No. FTC–2022– 

0046–0985. 

357 Individual commenter, Doc. No. FTC–2022– 

0046–1652. 

358 Individual commenter, Doc. No. FTC–2022– 

0046–7569. 

359 Individual commenter, Doc. No. FTC–2022– 

0046–0115. 

360 Individual commenter, Doc. No. FTC–2022– 

0046–0050. 

actual associated terms, for which a 

dealer will sell or lease an advertised 

vehicle until visiting the dealership and 

spending hours on the lot. When an 

advertisement or other communication 

references a monetary amount or 

financing term, it is reasonable for a 

consumer to expect that those amounts 

and terms are available for a vehicle at 

other standard terms, and, in the 

absence of information to the contrary, 

that no down payment or other 

consideration is required. If instead, for 

example, a dealer advertises a low 

monthly payment based on an 

unexpectedly long financing term or 

unexpectedly high interest rate that 

results in a higher total payment than 

standard terms would have yielded, or 

based on an expected but undisclosed 

down payment or other consideration to 

be provided by the consumer, the 

consumer will be induced to visit the 

dealership based on a misimpression of 

what they reasonably expect the total 

payment to be. 

If consumers knew that the true terms 

were beyond what was expected, or 

their transaction included charges for 

unwanted items, that would likely affect 

their choice to visit a particular 

dealership over another dealership. 

Thus, misleading consumers about cost 

information is material. A lack of total 

payment information therefore is likely 

to affect a consumer’s decision to 

purchase or lease a particular vehicle 

and is material, and paying an increased 

total cost causes substantial consumer 

injury. 

Thus, it is an unfair or deceptive act 

or practice for dealers to fail to disclose 

when making any representation about 

a monthly payment for any vehicle, the 

total amount the consumer will pay to 

purchase or lease the vehicle at that 

monthly payment after making all 

payments as scheduled, inclusive of 

assumed consideration. Further, this 

provision also addresses the 

misrepresentations prohibited by 

§ 463.3—including misrepresentations 

regarding material information about the 

costs or terms of purchasing, financing, 

or leasing a vehicle—by requiring 

consumers to be provided with the total 

payment amount associated with any 

represented monthly payment amount. 

It also helps prevent dealers from failing 

to obtain the express, informed consent 

of the consumer for charges, as required 

by § 463.5(c).354 To address these unfair 

or deceptive acts or practices, the 

Commission is requiring dealers to 

disclose, when making any 

representation about a monthly payment 

for any vehicle, the total amount the 

consumer will pay to purchase or lease 

the vehicle at that monthly payment 

after making all payments as scheduled, 

inclusive of assumed consideration. As 

with a vehicle’s price, when cost 

information in the market is distorted or 

concealed—especially in document- and 

time-intensive vehicle transactions— 

consumers are unable to effectively 

differentiate between sellers, and sellers 

trying to deal honestly with consumers 

are put at a competitive disadvantage. 

For the foregoing reasons, and having 

considered all of the comments that it 

received, the Commission is finalizing 

the required disclosure at § 463.4(d) 

largely as proposed, with the minor 

modifications of capitalizing the defined 

term ‘‘Vehicle,’’ substituting a period for 

a semi-colon and the word ‘‘and’’ at the 

end of § 463.4(d)(1), and clarifying that 

the requirements of § 463.4(d) also are 

‘‘prescribed for the purpose of 

preventing the unfair or deceptive acts 

or practices defined in this part, 

including those in §§ 463.3(a) and 

463.5(c).’’ 

(e) Monthly Payments Comparison 

Proposed § 463.4(e) required dealers, 

when making any comparison between 

payment options that includes 

discussion of a lower monthly payment, 

to disclose that the lower monthly 

payment will increase the total amount 

the consumer will pay to purchase or 

lease the vehicle, if true. For the reasons 

discussed in the following paragraphs, 

the Commission is finalizing the 

required disclosure at § 463.4(e) largely 

as proposed. The Commission is 

capitalizing the defined term ‘‘Vehicle’’ 

to conform with the definition at 

§ 463.2(e). The Commission also is 

adding language to the end of § 463.4(e) 

clarifying that the requirements in 

§ 463.4(e) ‘‘also are prescribed for the 

purpose of preventing the unfair or 

deceptive acts or practices defined in 

this part, including those in §§ 463.3(a) 

and 463.5(c).’’ 

A number of institutional commenters 

supported such a provision, 

emphasizing that it would provide an 

appropriate amount of helpful 

information and help make the true 

terms of a car deal much clearer to 

consumers. Many individual 

commenters also stressed the need for 

the Commission’s proposal: 

• My car buying experience involving 

dealers has include [sic] many of the 

issues identified, such as: . . . 

Negotiating a 4 year loan with a known 

loan payment (did math prior to final 

steps). Presented paperwork with a 

similar but lesser monthly payment. 

Dealer had changed terms to 5 year loan 

without open disclosure. Happy to hear, 

‘‘the bank gave you a better rate, you got 

a smaller payment,’’ almost didn’t catch 

what they’d done.355

• I have purchased about 10 new 

vehicles in my lifetime. . . . They prey 

on monthly payments as a tool, saying 

they can lower the monthly payment 

but not telling customers they added 

months or years to the term. Anything 

that forces them to be honest is a great 

justice for consumers! 356

• Sometimes, when you are in 

negotiations with a car dealer, they 

engage in deceptive practices by 

lowering your monthly payment amount 

without telling you how they lowered it. 

They may have increased your down 

payment or increased your interest rate 

or increased your term of the loan. This 

can lead [t]o much higher costs for the 

consumer. I had reached an agreement 

with a dealer to lower my monthly 

payments, but what they didn’t tell me 

until I got into the F & I manager’s office 

is that my deal [was] for 6 years, not 4, 

and they increased my interest rate.357

• . . . I was quoted a payment at 72 

months with adding aftermarket 

warranty but come to find out they 

extended my term to 76 months in order 

to meet what I wanted to pay monthly. 

I did not find this out until after I 

bought the car. Very dishonest 

dealership. This last minute bait and 

switch has to stop.358

• I purchased a truck from a 

Tennessee truck dealer. After agreeing 

on a monthly payment of $920 for 72 

months, I travelled to the dealership to 

complete the purchase, but the finance 

office changed the terms to 84 months 

with the same monthly payment, 

effectively adding $11,000 to their 

profit! 359

• I just want to walk in to a 

dealership, find a car that fits my needs 

and buy it. And what is up with these 

RIDUCULOUSLY [sic] long loan terms? 

72 MONTHS? If someone cannot afford 

a car dealers shouldn’t extend the loan, 

they should steer them to a more 

affordable car! 360

The Commission received numerous 

comments relating to the scope and 


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361As previously indicated, some such 

association commenters contended generally that 

the proposed total of payments disclosures at 

§ 463.4(d) and (e) overlapped with the Truth in 

Lending Act or other laws. The Commission 

responds to this point in the context of the 

discussion of § 463.4(d), in SBP III.D.2(d). 

362 Depending on the circumstances, a dealer may 

need to take additional measures, such as disclosing 

the specific basis for any increase in total costs, or 

amount of any such increase, in order to avoid 

deceiving consumers. 

363See, e.g., Fed. Trade Comm’n v. Windward 

Mktg., Inc., No. Civ.A. 1:96–CV–615F, 1997 WL 

33642380, at *10 (N.D. Ga. Sept. 30, 1997) (‘‘[A]ny 

representations concerning the price of a product or 

service are presumptively material.’’); Removatron 

Int’l Corp., 111 F.T.C. 206, 309 (1988) (‘‘The 

Commission presumes as material express claims 

and implied claims pertaining to a product’s . . . 

cost.’’ (citing Thompson Med. Co., Inc., 104 F.T.C. 

648, 817 (1984)); see also Fed. Trade Comm’n v. 

Crescent Pub. Grp., Inc., 129 F. Supp. 2d 311, 321 

(S.D.N.Y. 2001) (‘‘Information concerning prices or 

charges for goods or services is material, as it is 

‘likely to affect a consumer’s choice of or conduct 

regarding a product.’ ’’). 

terms of its proposed monthly payments 

comparison disclosure. A number of 

institutional and individual commenters 

urged the Commission to require that 

such disclosures uniformly be provided 

to consumers in writing. The 

Commission agrees with commenters 

that many monthly payment 

comparisons happen verbally, in the 

course of discussions with consumers. 

As proposed, the Commission’s monthly 

payment comparison disclosure made 

clear that such discussions are covered, 

and that dealers would be required to 

inform consumers in the course of such 

discussions—‘‘[w]hen making any 

comparison between payment 

options’’—if a represented lower 

monthly payment will increase the total 

amount the consumer will pay to 

purchase or lease the vehicle. The 

Commission believes there are 

significant consumer benefits when 

such disclosures are made verbally, 

close in time to when monthly payment 

options are discussed. Given that carbuying and leasing transactions are 

already lengthy and paperwork-heavy, 

the Commission believes it must be 

judicious with any additional written 

disclosure requirements to avoid 

crowding out other disclosures or other 

important information. Accordingly, the 

Commission has determined not to 

modify § 463.4(e) from its original 

proposal in order to mandate that the 

required disclosure always be made in 

writing. The Commission will continue 

to monitor the market for any further 

developments in this area and will 

consider whether to modify this or other 

Final Rule provisions in the future. 

Some commenters, including 

consumer advocacy organizations, urged 

the Commission to adopt specific 

proposed language rather than a general 

disclosure requirement, or a 

requirement that this disclosure include 

the total amount the consumer will pay 

at the lower monthly payment under 

discussion. Regarding the proposal to 

require particular, uniform disclosure 

language, the Commission did not 

receive, in the course of public 

comment, evidence sufficient to 

conclude that uniform formatting for the 

delivery of such disclosures would be 

necessary to make them effective. The 

Commission currently lacks information 

to evaluate whether any particular form 

disclosure would effectively 

communicate the required information 

to consumers in a manner that in all 

circumstances obviates deceptive or 

unfair conduct. Moreover, regarding the 

proposal to require that the monthly 

payment comparison disclosure 

additionally require dealers to disclose 

the new total amount that the consumer 

will pay, the Commission emphasizes 

that part 463 will require such a 

disclosure without the need to modify 

this provision from the Commission’s 

original proposal. As noted in the 

paragraph-by-paragraph analysis of 

§ 463.4(d) in SBP III.D.2(d), the 

Commission is finalizing § 463.4(d), 

which requires dealers making any 

representation about a monthly payment 

for a vehicle to disclose the total amount 

the consumer will pay to purchase or 

lease the vehicle at a given monthly 

payment amount after making all 

payments as scheduled, inclusive of 

assumed consideration, largely as 

proposed. The monthly payment 

comparison discussions covered by 

§ 463.4(e) are those that ‘‘include[] 

discussion of a lower monthly 

payment.’’ To the extent a dealer, in the 

course of such discussions, makes a 

representation ‘‘about a monthly 

payment for any Vehicle,’’ § 463.4(d) 

will require the dealer to disclose the 

total amount the consumer will pay at 

that monthly payment amount. 

Comments, including those from a 

number of dealership associations 361

and an individual commenter, 

characterized the Commission’s 

proposal as burdensome and likely to 

lead to excessive disclosures while 

providing little additional assistance to 

consumers. In response, the 

Commission emphasizes the 

streamlined nature of proposed 

§ 463.4(e). In its proposal, the 

Commission refrained from additional 

formal mandates in order to provide 

dealers with flexibility, within the 

bounds of the law, to provide this 

essential information—that a given 

lower monthly payment will increase 

the total amount the consumer will 

pay—including so that dealers already 

conveying this information in a nondeceptive manner may continue to do 

so. 

Thus, after careful review of the 

comments, the Commission has 

determined to finalize § 463.4(e) largely 

as proposed. When making any 

comparison between payment options, 

expressly or by implication, directly or 

indirectly, that includes discussion of a 

lower monthly payment, the failure to 

disclose that the lower monthly 

payment will increase the total amount 

the consumer will pay to purchase or 

lease the vehicle, if true, is likely to 

mislead consumers regarding the total 

terms associated with the lower 

monthly payment amount. When a 

dealer elects to compare between 

different monthly payment options, if 

the lower monthly payment would 

result in a higher total transaction cost, 

discussion of this fact is necessary to 

prevent the comparison from being 

misleading. Absent this information, it 

is reasonable for a consumer who is 

presented with a monthly payment 

comparison to expect that the lower 

monthly payment amount would 

correspond to lower total transaction 

cost. This is because the opposite can 

only be true if the dealer has created a 

so-called ‘‘apples to oranges’’ 

comparison, in which an undisclosed 

element of the transaction—such as the 

length of the payment term, or the 

existence of a balloon payment—has not 

been kept constant across the two 

monthly payment scenarios being 

compared. Under such circumstances, 

without providing the consumer with 

further information, the dealer’s claims 

regarding monthly payment amounts 

falsely imply saving or parity between 

different offers where reduced monthly 

payments increase the total vehicle cost. 

Thus, where a lower monthly payment 

amount represents a more expensive 

transaction, the dealer must, at a 

minimum, disclose this simple but 

counterintuitive fact to not deceive 

consumers.362

Furthermore, as explained in the 

NPRM and in the paragraph-byparagraph discussion of § 463.4(d) in 

SBP III.D.2(d), cost is one of the most 

material pieces of information for a 

consumer in making an informed 

purchasing decision.363

Regarding unfairness, when making 

any comparison between payment 

options, expressly or by implication, 

directly or indirectly, that includes 

discussion of a lower monthly payment, 

the failure to disclose that the lower 

monthly payment will increase the total 


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Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 645 

364See 15 U.S.C. 57a(a)(1)(B) (the Commission 

‘‘may include requirements prescribed for the 

purpose of preventing’’ unfair or deceptive acts or 

practices). 

amount the consumer will pay to 

purchase or lease the vehicle, if true, is 

likely to cause substantial injury to 

consumers who waste time and effort 

pursuing offers that are not actually 

available at the total payment amount 

they expect; or who pay more for a 

vehicle sales or lease transaction than 

they expected by being subject to 

hidden charges or an unexpected down 

payment or trade-in requirement; or 

who are subject to the higher financing 

costs and greater risk of default 

associated with an unexpectedly 

lengthy loan term. 

Furthermore, the injury caused by 

withholding this information is not 

reasonably avoidable by consumers. 

During negotiations, if dealers agree to 

a lower monthly payment, consumers 

have no reason to expect that this 

apparent ‘‘concession’’ in fact means an 

increased total vehicle cost due to an 

increased payment term or annual 

percentage rate. Under such 

circumstances, dealers can also add 

unwanted, undisclosed, or even 

fictitious add-on charges more easily, by 

increasing the payment term enough 

that including add-on charges would 

still result in a lower monthly payment 

as a ‘‘concession’’ to the consumer. The 

injury to consumers from a lack of price 

information is not outweighed by any 

benefits to consumers or competition 

from withholding this basic 

information. Instead, information about 

increased cost protects consumers from 

lost time and effort, and unexpected 

charges while increasing competition 

among dealers, who would be able to 

compete on truthful, standard terms. 

The costs of stating that the total 

payment has increased—which the 

dealer determines and can calculate 

upfront—are minimal for dealers that 

are already making representations 

about a monthly payment for a vehicle, 

especially when compared to the injury 

to consumers. 

Thus, it is an unfair or deceptive act 

or practice for dealers to fail to disclose, 

when making any comparison between 

payment options, expressly or by 

implication, directly or indirectly, that 

includes discussion of a lower monthly 

payment, that the lower monthly 

payment will increase the total amount 

the consumer will pay to purchase or 

lease the vehicle, if true. Further, this 

provision also serves to prevent the 

misrepresentations prohibited by 

§ 463.3—including misrepresentations 

regarding material information about the 

costs or terms of purchasing, financing, 

or leasing a vehicle—by requiring 

consumers to be given accurate 

information that the total payment will 

increase when presented with a lower 

monthly payment. It also helps prevent 

dealers from failing to obtain the 

express, informed consent of the 

consumer for charges, as addressed by 

§ 463.5(c), including charges relating to 

the financing or lease of a vehicle.364

Thus, the Commission is requiring 

dealers to disclose, when making any 

comparison between payment options, 

expressly or by implication, directly or 

indirectly, that includes discussion of a 

lower monthly payment, that the lower 

monthly payment will increase the total 

amount the consumer will pay to 

purchase or lease the vehicle, if true. As 

with a vehicle’s price, when cost 

information in the market is distorted or 

concealed—especially in document- and 

time-intensive vehicle transactions— 

consumers are unable to effectively 

differentiate between sellers, and sellers 

trying to deal honestly with consumers 

are put at a competitive disadvantage. 

For the foregoing reasons, and having 

considered all of the comments that it 

received on this proposed provision, the 

Commission is finalizing the required 

disclosure at § 463.4(e) largely as 

proposed, with the minor modifications 

of capitalizing the defined term 

‘‘Vehicle’’ additional language clarifying 

that the requirements in § 463.4(e) ‘‘also 

are prescribed for the purpose of 

preventing the unfair or deceptive acts 

or practices defined in this part, 

including those in §§ 463.3(a) and 

463.5(c).’’ 

E. § 463.5: Dealer Charges for Add-Ons 

and Other Items 

1. Overview 

Proposed § 463.5 prohibited motor 

vehicle dealers from charging for add-on 

products or services from which the 

consumer would not benefit; from 

charging consumers for undisclosed or 

unselected add-ons unless certain 

requirements were met; and from 

charging for any item unless the dealer 

obtains the express, informed consent of 

the consumer for the item. 

In response to the NPRM, various 

stakeholder groups and individuals 

submitted comments regarding these 

proposed provisions. Among these were 

comments in favor of the provisions; 

comments that urged the Commission to 

include additional restrictions on addon charges; and comments questioning 

or recommending against the proposed 

provisions. 

After careful consideration of the 

comments, the Commission has 

determined to finalize § 463.5(a) and (c) 

without substantive modification and 

has determined not to finalize § 463.5(b) 

regarding undisclosed or unselected 

add-ons. The Commission also is 

making minor textual edits to the 

introductory language in § 463.5 for 

clarity and consistency: substituting 

‘‘Federal Trade Commission Act’’ for 

‘‘FTC Act’’; adding ‘‘Covered’’ to ‘‘Motor 

Vehicle Dealer’’ to conform with the 

defined term at § 463.2(f) (‘‘ ‘Covered 

Motor Vehicle Dealer’ or ‘Dealer’ ’’), and 

capitalizing ‘‘Vehicles’’ to conform with 

the defined term at § 463.2(e) 

(‘‘ ‘Covered Motor Vehicle’ or 

‘Vehicle’ ’’). 

In the following analysis, the 

Commission examines each proposed 

provision in § 463.5; the substantive 

comments relating to each provision; 

responses to these comments; and the 

Commission’s final determination with 

regard to each proposed provision. 

2. Paragraph-by-Paragraph Analysis of 

§ 463.5 

(a) Add-Ons That Provide No Benefit 

Section 463.5(a) of the proposed rule 

prohibited motor vehicle dealers from 

charging for add-ons if the consumer 

would not benefit from such an add-on, 

including a pair of enumerated 

examples. For the following reasons, the 

Commission is finalizing this provision 

largely as proposed, with modifications 

to correct a misplaced hyphen; add the 

word ‘‘that’’ before ‘‘are duplicative of 

warranty coverage’’; and capitalize the 

defined term ‘‘Vehicle’’ to conform with 

the revised definition at § 463.2(e). The 

Commission also is adding language to 

the end of § 463.5(a), at newly 

designated (a)(3), clarifying that the 

requirements in § 463.5(a) ‘‘also are 

prescribed for the purpose of preventing 

the unfair or deceptive acts or practices 

defined in this part, including those in 

§ 463.3(a) and (b) and paragraph (c) of 

this section.’’ Relatedly, the 

Commission is finalizing the definition 

of the term ‘‘GAP Agreement,’’ which is 

referenced in this provision and defined 

in § 463.2(h) of the Final Rule, 

substantively as proposed, with minor 

modifications to correct a misplaced 

period, substitute ‘‘Vehicle’’ for both 

‘‘vehicle’’ and ‘‘motor vehicle’’ to 

conform with the revised definition at 

§ 463.2(e), and remove an extraneous 

term—‘‘insured’s’’—without changing 

the definition’s operation. 

Many commenters, including a 

number of industry participants and 

associations, stated that products that 

provide no benefit to the consumer 

should not be sold in connection with 

the sale or financing of vehicles. Many 

commenters that supported the 


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646 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

365See, e.g., Individual commenter, Doc. No. 

FTC–2022–0046–1608 at 6. 

366See, e.g., Comment of 18 State Att’ys Gen., Doc 

No. FTC–2022–0046–8062 at 9. 

367See, e.g., Individual commenter, Doc. No. 

FTC–2022–0046–0565. 

368 Individual commenter, No. FTC–2002–0046– 

0565. 

369 Individual commenter, No. FTC–2002–0046– 

4552. 

370 Individual commenter, Doc. No. FTC–2022– 

0046–0854. 

371 Individual commenter, Doc. No. FTC–2022– 

0046–1393. 

372 Individual commenter, Doc. No. FTC–2022– 

0046–5493. 

373 Individual commenter, Doc. No. FTC–2022– 

0046–6816. 

374See, e.g., Legal Aid Just. Ctr., Doc. No. FTC– 

2022–0046–7833 at 3. 

375Comment of Legal Action Chi., Doc. No. FTC– 

2022–0046–8097 at 10. 

376See also Consumer Fin. Prot. Bureau, ‘‘What 

Is Vendor’s Single Interest (VSI) insurance? ’’ (Aug. 

16, 2016), https://www.consumerfinance.gov/askcfpb/what-is-vendors-single-interest-vsi-insuranceen-731/. 

provision stated, inter alia, that the 

examples the Commission enumerated 

in this paragraph were obvious 365 and 

particularly helpful for less-experienced 

buyers who may be led to believe that 

a particular product or service would be 

beneficial.366 Some individual 

commenters, for instance, noted that 

they had no way to confirm whether the 

‘‘nitrogen-filled’’ tires they purchased 

with their vehicle actually had more 

nitrogen than naturally exists in the air, 

even though they were told the 

purchase of this service was 

mandatory.367 At least one individual 

commenter described requesting to see 

the nitrogen tank after such a purchase 

and being denied by the dealer. 

Examples of public comments about 

add-ons include the following: 

• I would argue that this does not go 

far enough but it [is] a good start. As 

someone who is trying to purchase a 

new vehicle, there is a[n] endless 

supply of ‘‘perk packages’’ or ‘‘Family 

deals’’ that I ‘‘must purchase’’ if I would 

like to acquire a car from a dealer. These 

include a variety of dubious products 

such as insurance policies that pay out 

$3,500 if your car is stolen (and can’t be 

found) in the first 90 days of ownership, 

if your car is totaled by your insurance 

company in the first 90 days they’ll pay 

$3,500. Nitrogen in the tires (A $196 

value). Vin Etching on the windows, 

plastic stickers on the door handles to 

prevent scratches. These items are a 

requirement to bundle with the vehicle 

and a deal that provides ‘‘over $7,000 in 

value’’ for $2,995. These tricks ignore 

the obvious, such as your car can not be 

both stolen (unrecovered) AND totaled 

so it’s impossible to collect on both 

policies so the cumulative ‘‘value’’ of 

this package is overstated.368

• One of the latest scams is to force 

you to buy a $1,000 gps unit so they can 

recover the car if you miss payments. 

This shouldn’t be allowed.369

• Second vehicle I purchased had a 

$1,650 ‘‘protection pkg’’ plus the usual 

nitrogen in the tires BS. This time I 

asked to be shown the nitrogen tank 

they fill the tires with, they refused 

saying due to insurance rules customers 

aren’t allowed in the shop. I asked them 

to take off the paint and fabric 

protection charge also, they declined at 

first until I reminded them they just got 

the vehicle the night before and there 

was still plastic factory coverings on the 

seats and strips of plastic on the 

vehicles body protecting certain areas. 

This time they mumbled some excuse 

about the addendum added to the price 

is put on the vehicle as soon as it arrives 

and they hadn’t had ‘‘time’’ to apply all 

the overpriced add[-]ons.370

• I’m a former carsalesperson 

[sic]. . . . Dealers should be banned 

from selling . . . special paints to 

protect from rust . . . . No coatings are 

added.371

• I worked at a Dodge/Ram dealership 

for three years at the make ready 

(carwash) department. When new 

vehicles arrived their tires were rarely 

deflated and then filled with nitrogen. It 

is my understanding that the 

manufacture initially paid for the 

nitrogen fill and the customer was later 

charged.372

• [O]ne of my previous purchases 

almost ended . . . with GAP that was so 

unnecessary, the lender called us a few 

days later after we already had the car 

and told us we’d be experiencing a 

lower monthly payment unless we 

wanted the price of the product back in 

a check because of the price we 

negotiated and the sizable down 

payment, it was impossible for GAP to 

ever be required.373

A number of individual commenters 

indicated they did not consider nitrogen 

tires a valuable purchase and expressed 

no desire to purchase them. Many 

commented that, when they informed 

their respective dealers that they did not 

want these add-ons, the dealers would 

represent, inter alia, that nitrogen tires 

were required by law, that their 

insurance premium would increase 

without the add-on, that new foreign 

vehicles coming into the country must 

have nitrogen-filled tires under the law, 

or that the consumer needed to 

purchase nitrogen tires to meet fuel 

economy standards. 

Other commenters supported this 

proposed provision while also 

recommending that the Commission 

broaden its scope to prohibit the sale of 

add-on products or services that provide 

only ‘‘minimal’’ benefit to 

consumers.374 One such commenter, for 

instance, suggested the provision be 

expanded to prohibit dealers from 

charging for an add-on unless it 

provides a ‘‘substantial, material 

benefit’’ to consumers.375 Another 

commenter contended that there are a 

number of add-ons not meeting such 

standards being sold in connection with 

the sale or financing of vehicles, 

including future servicing packages for 

vehicle tune-ups and oil changes that 

are sold to remote or out-of-State 

consumers who are exceedingly 

unlikely to return to the dealership for 

such services; tracking devices that are 

used almost exclusively for electronic 

repossession; and ‘‘vendor’s single 

interest’’ or ‘‘VSI’’ insurance, which 

protects the financing entity, but not the 

consumer, in the event that the vehicle 

is damaged or destroyed.376

The Commission acknowledges the 

considerable consumer harm that results 

from the sale of such add-ons and notes 

that several provisions in the Rule it is 

finalizing will address misconduct 

related to these and other add-ons, 

including many of the practices 

described by those commenters 

recommending further action. For 

example, to the extent that dealers make 

misrepresentations about any benefit of 

an add-on, such conduct would violate 

§ 463.3(b) of the Final Rule. Thus, were 

a dealer, for instance, to promote the 

sale of an add-on—such as a tracking 

device that is used almost exclusively 

for electronic repossession—based on its 

supposed benefit to the consumer, when 

the product primarily benefits another 

party, such conduct would violate the 

Rule even if the product otherwise 

provides an ancillary or marginal 

benefit to consumers. And if the add-on 

provided no benefit to the consumer 

and only a benefit to another party, 

§ 463.5(a) would prohibit the dealer 

from charging the consumer for it. 

Further, to the extent that dealers charge 

for add-ons without express, informed 

consumer consent for the charge, such 

conduct would violate § 463.5(c). 

The Commission recognizes that there 

may be significant consumer benefits 

from implementing additional 

restrictions on the sale of add-on 

products or services. However, without 

additional information on costs and 

benefits to consumers or competition 

associated with such restrictions, the 

Commission has determined not to 

implement such restrictions in this 

Final Rule. The Commission will 

continue to monitor the motor vehicle 


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377One consumer attorney commenter requested 

that the Commission clarify that warranty 

disclaimers are not a valid defense to common law 

fraud and statutory consumer fraud, and that, if 

fraud is proven, warranty disclaimers are not an 

allowable defense to UCC actions. In response, the 

Commission notes that none of the provisions the 

Commission is finalizing state that warranty 

disclaimers are a defense to common law fraud or 

in UCC actions. 

marketplace to gather additional 

information on this issue and will 

consider whether to modify or expand 

§ 463.5(a) in the future, including on the 

basis of stakeholder experience with 

this provision and whether it effectively 

addresses unlawful conduct. 

Commenters also urged the 

Commission to adopt a number of 

additional measures regarding the sale 

of such add-ons. A consumer advocacy 

organization, for instance, proposed that 

the Commission require dealers to list 

coverage limitations for add-ons that 

may overlap with a vehicle’s warranty 

coverage, observing that consumers 

commonly are not aware of important 

limitations until the add-on, such as a 

warranty or service contract, is needed, 

and only then does the consumer learn 

the add-on does not provide the 

anticipated benefits. A State consumer 

protection agency recommended that 

the Commission require affirmative 

disclosures for the sale of add-ons that 

may provide only ‘‘nominal’’ benefit, 

offering a list of what they characterized 

as such products for the Commission to 

consider in conjunction with this 

recommendation. 

In response, the Commission notes 

that other provisions in part 463 address 

misconduct relating to these issues, 

including by prohibiting 

misrepresentations regarding material 

information about add-ons, by requiring 

disclosures about optional add-ons, and 

by requiring dealers to obtain the 

express, informed consent of the 

consumer for add-on charges. Thus, 

misrepresenting the coverage limitations 

of an add-on; making representations 

regarding an optional add-on without 

disclosing that it is not required and 

that the consumer can purchase or lease 

the vehicle without the add-on; and 

charging for an add-on under false 

pretenses or without the consumer’s 

express, informed consent would violate 

other provisions the Commission is 

finalizing. The Commission is 

concerned that requiring additional 

disclosures may have the effect of 

reducing the saliency of key information 

in what is already a lengthy, paperworkheavy transaction. Accordingly, the 

Commission has determined not to 

adopt additional such disclosure 

measures in this Final Rule. 

In addition, at least one consumer 

protection agency commenter asked the 

Commission to consider deeming it an 

unfair or deceptive act or practice to sell 

any add-on product for a price greater 

than the value of the product itself. The 

Commission declines to restrict the sale 

of add-on products at a price higher 

than the value of the product itself, 

absent additional information, including 

information regarding the costs and 

benefits to consumers and competition 

of such a restriction.377

A number of industry association 

commenters claimed the provision was 

vague and requested the Commission set 

forth how to calculate the loan-to-value 

(‘‘LTV’’) ratio at which a GAP agreement 

would be non-beneficial, given that 

there could be fluctuation of the vehicle 

value in the future. Some suggested that 

the Commission adopt a presumption or 

safe harbor that dealers complying with 

an LTV calculation set by the 

Commission be deemed in compliance 

with the portion of the proposal related 

to GAP agreements. 

Other industry association 

commenters argued against adopting a 

set LTV ratio as the basis for 

determining whether a consumer would 

benefit from a GAP agreement, claiming 

that the vehicle financing entity is best 

positioned to determine whether such 

an add-on would be beneficial. 

Relatedly, some industry association 

commenters contended that certain GAP 

agreements sold on a low-LTV loan, or 

that limit benefits based on a 

consumer’s LTV ratio, could still 

provide additional benefits. 

A financing association commenter 

contended that any final rule should not 

create rules around the calculation of 

the LTV ratio. Another financing group 

proposed that the Commission require 

dealers to provide disclosures that 

would inform consumers of any 

potential value gap between a vehicle’s 

purchase price and its appraised value. 

With regard to establishing LTV ratio 

parameters for the sale of GAP 

agreements, without further information 

from commenters regarding the costs 

and benefits of establishing a particular 

LTV ratio as the basis for determining 

whether a consumer would benefit from 

a GAP agreement, or a particular 

method for calculating the LTV ratio, 

and given the Commission’s previously 

stated information saliency concerns 

about finalizing additional disclosures 

in an already lengthy transaction, the 

Commission has determined not to 

establish in this Final Rule a particular 

numeric threshold or calculation 

regarding the sale of GAP agreements to 

consumers, or to require additional 

associated disclosures. Regarding the 

benefits of certain GAP agreements, this 

provision restricts sales of GAP 

agreements where the consumer would 

not benefit. If there are benefits to the 

consumer, dealers must abide by other 

provisions in the Final Rule, including 

the requirements that the dealer 

represents the extent of those benefits 

accurately (§ 463.3(b)) and obtains 

express, informed consent from the 

consumer for the charges for this item 

(§ 463.5(c)). 

The Commission also received some 

industry association comments claiming 

that each State imposes differing 

requirements as to coverage, 

disclosures, exceptions, and product 

terms of GAP agreements. One such 

commenter asked for guidance on how 

a bright-line, State-law rule on LTV 

ratios would interact with the FTC’s 

proposal. Another such commenter 

requested the FTC reconcile different 

State-law approaches to the sale of GAP 

agreements, particularly regarding how 

this proposed provision would interact 

with a State law that, according to the 

commenter, only requires a dealer to 

have a reasonable belief that the 

customer may be eligible for a benefit. 

In response, the Final Rule does not 

disturb State law unless it is 

inconsistent with part 463, and then 

only to the extent of the inconsistency. 

Where, for example, State laws restrict 

the sale of GAP agreements if the LTV 

ratio for the transaction is below a 

certain threshold, or require that dealers 

have a ‘‘reasonable belief’’ that the GAP 

agreement would benefit the consumer, 

dealers in that State can, and must, 

comply with the State law and with the 

Rule. Pursuant to such State law, 

dealers would be prohibited from 

selling the product if the LTV ratio is 

below the established threshold or if 

they do not reasonably believe the GAP 

agreement would benefit the consumer 

and, pursuant to the Final Rule, if the 

LTV ratio would result in the consumer 

not benefitting financially. To the extent 

there is an actual conflict between the 

Commission’s Final Rule and a State 

law—and the Commission is skeptical 

that there is such a State law that 

explicitly allows for the sale of a 

product that does not benefit the 

consumer—the Commission refers 

commenters to § 463.9, which sets forth 

the Rule’s relation to State laws. 

With respect to the proposed 

definition of ‘‘GAP Agreement,’’ an 

industry association commenter 

contended that the phrase ‘‘the actual 

cash value of the insured’s vehicle in 

the event of an unrecovered theft or 

total loss’’ meant the value of the 

vehicle at some point in the future, and 

asserted that future vehicle values 

cannot be accurately determined at the 


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648 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

378 15 U.S.C. 1012(b). 

379See Consumer Fin. Prot. Bureau, ‘‘Supervisory 

Highlights: Issue 19, Summer 2019’’ 3–4 (Sept. 

2019), https://files.consumerfinance.gov/f/ 

documents/cfpb_supervisory-highlights_issue-19_

092019.pdf (finding instances in which auto lenders 

sold ‘‘a GAP product to consumers whose low LTV 

meant that they would not benefit from the 

product’’). 

380See, e.g., Shannon Osaka, ‘‘Electric vehicles 

are hitting a road block: Car dealers,’’ Wash. Post 

(Nov. 9, 2023), https://www.washingtonpost.com/ 

climate-solutions/2023/11/09/car-dealerships-evsales (describing a dealership salesperson offering 

an electric vehicle-buyer a plan for oil changes and 

an extended warranty for a gas-powered car); see 

also Consumer Fin. Prot. Bureau, ‘‘Supervisory 

Highlights: Issue 24, Summer 2021’’ 3–4 (June 

2021), https://files.consumerfinance.gov/f/ 

documents/cfpb_supervisory-highlights_issue-24_

2021-06.pdf (finding servicers added and 

maintained unnecessary collateral protection 

insurance (CPI) when consumers had adequate 

insurance and thus the CPI provided no benefit to 

the consumers, and also when consumers’ vehicles 

had been repossessed even though no actual 

insurance protection was provided after 

repossession). 

381Comment of Competitive Enter. Inst., Doc. No. 

FTC–2022–0046–7670 at 6. 

time of sale. The proposed definition, 

however, did not prescribe how dealers 

must calculate a vehicle’s cash value; 

rather, it explains that the term ‘‘GAP 

Agreement’’ means an agreement to 

indemnify a vehicle purchaser for any 

difference between such value, however 

determined, in the event of an 

unrecovered theft or total loss, and the 

amount owed, regardless of what that 

difference may be. Upon examination of 

this phrase, however, the Commission 

has determined to remove the term 

‘‘insured’s’’ because it is extraneous and 

does not affect the operation of this 

definition: with or without the term, the 

phrase describes the manner in which a 

qualifying GAP agreement determines 

the amount to indemnify a vehicle 

purchaser or lessee. In context in this 

definition, it is clear without the term 

‘‘insured’s’’ that the applicable 

‘‘Vehicle’’ is the one covered by the 

GAP agreement. Omitting this 

unnecessary term thus avoids confusion 

without substantively changing this 

definition. 

One industry association commenter 

argued that reference to ‘‘GAP 

insurance’’ should be removed from the 

definition of ‘‘GAP Agreement’’ because 

of the McCarran-Ferguson Act’s reversepreemption of certain Federal laws that 

‘‘invalidate, impair, or supersede’’ State 

laws enacted ‘‘for the purpose of 

regulating the business of 

insurance.’’ 378 As previously discussed 

with regard to the definition of ‘‘Addon,’’ however, commenters have 

provided no evidence that the proposed 

or Final Rule would invalidate, impair, 

or supersede State laws enacted for the 

purpose of regulating insurance. Rather 

than affecting any State’s regulation of 

insurance, the Final Rule prohibits 

dealers from making misrepresentations 

regarding add-ons, from failing to 

disclose when add-ons are not required, 

and from charging for add-ons that 

provide no benefit or for which the 

consumer has not provided express, 

informed consent. The Commission 

therefore finalizes the definition of 

‘‘GAP Agreement’’ largely as proposed 

in its NPRM with minor modifications 

to correct a misplaced period, substitute 

‘‘Vehicle’’ for both ‘‘vehicle’’ and 

‘‘motor vehicle’’ to conform with the 

revised definition at § 463.2(e), and 

remove an extraneous term— 

‘‘insured’s’’—without changing the 

definition’s operation. 

While acknowledging that products or 

services that provide no benefit to 

consumers should not be sold, 

commenters including an industry 

association also argued that the 

Commission’s proposed provision was 

vague and required more research. Some 

industry association commenters 

expressed concern regarding how the 

Commission would determine whether 

an item would not benefit the consumer. 

In response, the Commission provides 

the following information. Proposed 

§ 463.5(a) included enumerated 

examples of add-ons from which 

consumers would not benefit: (1) 

nitrogen-filled tires that contain no 

more nitrogen than normally found in 

the air, and (2) products or services that 

do not provide coverage for the vehicle, 

the consumer, or the transaction, or are 

duplicative of warranty coverage for the 

vehicle, including a GAP agreement if 

the consumer’s vehicle or neighborhood 

is excluded from coverage or the LTV 

ratio would result in the consumer not 

benefitting financially.379 As these 

examples illustrate, determining that a 

consumer would not benefit from an 

add-on involves analyzing objective 

standards under the circumstances, 

such as whether the add-on provides 

benefits; whether the consumer is 

eligible to use the add-on; whether the 

add-on’s coverage excludes the vehicle 

at issue; and whether the add-on is 

incompatible with the vehicle at issue. 

Thus, additional examples of add-ons 

that would be prohibited by this 

provision include the following: 

purported rust-proofing add-ons that do 

not actually prevent rust; purported 

theft-prevention or theft-deterrent addons that do not prevent or deter theft; 

and add-ons that the vehicle itself 

cannot support, including engine oilchange services for a vehicle, such as an 

electric vehicle, that does not use engine 

oil, or software or audio subscription 

services for a vehicle that cannot 

support the software or utilize the 

subscription.380

One association commenter argued 

that the phrase ‘‘nitrogen-filled tire 

related-products or services that contain 

no more nitrogen than naturally exists 

in the air’’ in proposed § 463.5(a)(1) 

would create a standard with which it 

may be impossible to comply because 

‘‘no individual set of tires could have a 

higher total quantity of nitrogen than 

that in ‘the air’ that stretches around the 

planet.’’ 381 This commenter requested 

that the Commission clarify to avoid 

this possible reading. Here, the 

Commission notes that the phrase does 

not prohibit such tires if they do not 

contain a ‘‘higher total quantity of 

nitrogen than that in the air’’; instead, 

charging for a nitrogen-filled tire would 

fail by this standard if it contains ‘‘no 

more nitrogen than’’ the proportion that 

‘‘naturally exists in the air.’’ 

One industry association commenter 

requested more explanation from the 

Commission regarding what would be 

considered ‘‘duplicative of warranty 

coverage’’ under proposed § 463.5(a)(2), 

while another contended that vehicle 

service contracts that overlap with a 

manufacturer’s warranty may still 

provide additional, beneficial coverage, 

such as after the manufacturer’s 

warranty expires. In response, the 

Commission notes that this provision 

prohibits the sale of warranties that are 

duplicative. A dealer may offer a 

warranty add-on that has some overlap 

in coverage with existing warranty 

coverage for the vehicle, but the add-on 

must provide additional protection. 

Moreover, other provisions of the Final 

Rule address misconduct relating to 

warranties, including by prohibiting 

misrepresentations regarding material 

information about any costs, limitation, 

benefit, or any other aspect of the 

warranty product or service. For 

example, under the Final Rule, a dealer 

may not mislead a consumer as to the 

benefits or conditions of the warranty, 

including amount or length of coverage 

(§ 463.3(b)). In addition, under 

§ 463.5(c), the dealer must obtain the 

express, informed consent of the 

consumer for the charge for the 

warranty (§ 463.5(c)). 

Other commenters, including an 

industry association, asserted that this 

proposed provision would cause dealers 

to stop offering beneficial products or 

services. The Commission notes that its 

proposal did not require such a result 

and emphasizes that this provision 

would prevent charges to consumers for 

products or services that provide them 


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382Removatron Int’l Corp. v. Fed. Trade Comm’n, 

884 F. 2d 1489, 1497 (1st Cir. 1989) (‘‘Disclaimers 

or qualifications . . . are not adequate to avoid 

liability unless they are sufficiently prominent and 

unambiguous to change the apparent meaning of 

the claims and to leave an accurate impression. 

Anything less is only likely to cause confusion by 

creating contradictory double meanings.’’). 

383See, e.g., Fed. Trade Comm’n v. Windward 

Mktg., Ltd., No. Civ.A. 1:96–CV–615F, 1997 WL 

33642380, at *10 (N.D. Ga. Sept. 30, 1997) (‘‘[A]ny 

representations concerning the price of a product or 

service are presumptively material.’’); Removatron 

Int’l Corp., 111 F.T.C. 206, 309 (1988) (‘‘The 

Commission presumes as material express claims 

and implied claims pertaining to a product’s . . . 

cost.’’ (citing Thompson Med. Co., Inc., 104 F.T.C. 

648, 817 (1984)); see also Fed. Trade Comm’n v. 

Crescent Pub. Grp., Inc., 129 F. Supp. 2d 311, 321 

(S.D.N.Y. 2001) (‘‘Information concerning prices or 

charges for goods or services is material, as it is 

‘likely to affect a consumer’s choice of or conduct 

regarding a product.’ ’’). 

384Even under a hypothetical scenario wherein a 

consumer understood an add-on would not benefit 

them but wanted to pay extra for the add-on 

anyway, in the case of an act or practice challenged 

by the agency as deceptive or unfair, ‘‘the FTC need 

not prove that every consumer was injured. The 

existence of some satisfied customers does not 

constitute a defense . . . .’’ Fed. Trade Comm’n v. 

Amy Travel Serv., Inc., 875 F.2d 564, 572 (7th Cir. 

1989), vacated in part on other grounds, Fed. Trade 

Comm’n v. Credit Bureau Ctr., LLC, 937 F.3d 764 

(7th Cir. 2019); accord Fed. Trade Comm’n v. 

Stefanchik, 559 F.3d 924, 929 n.12 (9th Cir. 2009). 

385See, e.g., Consumer Fin. Prot. Bureau, 

‘‘Supervisory Highlights: Issue 19, Summer 2019’’ 

3–4 (Sept. 2019), https://files.consumerfinance.gov/ 

f/documents/cfpb_supervisory-highlights_issue-19_

092019.pdf (describing findings, from supervisory 

examinations, of lenders selling GAP agreements to 

consumers whose low LTV meant that they would 

not benefit from the product: ‘‘By purchasing a 

product they would not benefit from, consumers 

demonstrated that they lacked an understanding of 

a material aspect of the product. The lenders had 

sufficient information to know that these consumers 

would not benefit from the product. These sales 

show that the lenders took unreasonable advantage 

of the consumers’ lack of understanding of the 

material risks, costs, or conditions of the product.’’). 

386See, e.g., NPRM at 42030 (Question 33) (‘‘In 

particular, the Commission is contemplating 

whether any final Rule should restrict dealers from 

selling add-ons (other than those already installed 

on the vehicle) in the same transaction, or on the 

same day, the vehicle is sold or leased.’’); id. 

(Question 38) (discussing proposed § 463.5(c) and 

asking ‘‘Does the proposal provide a meaningful 

way to obtain consent in an already disclosureheavy transaction? If it would result in too many 

disclosures, what other measures could be taken to 

protect consumers from unauthorized charges? ’’). 

no benefit. To the extent that a 

prohibition against charging consumers 

for items that provide no benefit to the 

consumer may cause some dealers to 

discontinue offering beneficial products, 

consumers would be free to instead visit 

other dealerships or to seek the same or 

similar offerings from other providers. 

Dealers, of course, continue to be free 

under the Final Rule to offer beneficial 

add-ons to consumers—consistent with 

existing law and with other provisions 

of this Rule. 

Some commenters, including industry 

associations and a dealership 

association, raised concerns about 

compliance administrability for this 

proposed provision in the case of 

products attached to a vehicle by 

manufacturers that may provide no 

benefit, questioning whether, if this 

proposal went into effect, dealers would 

be prohibited from charging for such 

products. In response, the Commission 

refers commenters to the definition of 

‘‘Add-on’’ or ‘‘Add-on Product(s) or 

Service(s)’’ in § 463.2(a). Notably, ‘‘Addon’’ is defined, in relevant part, as any 

‘‘product(s) or service(s) not provided to 

the consumer or installed on the Vehicle 

by the Vehicle manufacturer . . .’’ 

Thus, if an add-on product or service is 

installed on the vehicle by the motor 

vehicle manufacturer, it falls outside the 

scope of this definition, and 

concomitantly, outside the scope of the 

provision at § 463.5(a). Nonetheless, 

other provisions in the Final Rule 

address misconduct relating to this 

issue. For instance, as examined in 

additional detail in the discussion of 

§ 463.4, in SBP III.D, the offering price 

for the vehicle would be required to 

incorporate the charges for any such 

items if the dealer requires the 

consumer to pay for them. In addition, 

as described in additional detail in the 

discussion of § 463.5(c), in SBP 

III.E.2(c), a dealer may not charge for 

any such item unless the dealer obtains 

the express, informed consent of the 

consumer for the charge. 

Another industry association 

commenter incorrectly stated that this 

provision was beyond the FTC’s 

authority and correctly noted that the 

Commission has the authority to see 

that products are marketed and 

advertised fairly and honestly. As the 

commenter acknowledged, the 

Commission has the authority to 

address unfair and deceptive conduct; 

that is precisely what this provision 

does. Dealerships charging consumers 

for add-ons from which the consumers 

would not benefit is both a deceptive 

and unfair act or practice in violation of 

the FTC Act, as discussed in the 

following paragraphs. To address this 

deception or unfairness, the 

Commission is finalizing this provision 

with minor modifications, including 

one to correct a typographical error in 

the placement of a hyphen in a phrase 

in proposed § 463.5(a)(1). In the NPRM, 

the relevant phrase appeared as, ‘‘(1) 

Nitrogen-filled tire related-products or 

services’’; in the Final Rule, the 

corrected phrase will now read as 

follows: ‘‘(1) Nitrogen-filled tire-related 

products or services.’’ For clarity, the 

Commission is also adding the word 

‘‘that’’ before ‘‘are duplicative of 

warranty coverage;’’ capitalizing the 

defined term ‘‘Vehicle’’ to conform with 

the revised definition at § 463.2(e); and 

adding language clarifying that the 

requirements of § 463.5(a) also are 

‘‘prescribed for the purpose of 

preventing the unfair or deceptive acts 

or practices defined in this part, 

including those in § 463.3(a) and (b) and 

paragraph (c) of this section.’’ 

Dealerships charging consumers for 

add-ons from which the consumers 

would not benefit involves deceptive 

conduct. When a dealer charges 

consumers for add-ons that would not 

benefit the consumers, the dealer either 

(1) discusses the add-on charges or (2) 

is silent about these items. In the first 

scenario, if a dealer discusses add-on 

charges, consumers typically would not 

agree to pay such charges for additional 

products from which they could not 

benefit unless they are led to believe, 

directly or by omission, that these 

products would in fact be beneficial to 

them. Thus, the dealer would be 

misleading consumers, even in the 

event the dealer subsequently provides 

a disclaimer indicating the add-on 

would not benefit the consumer.382 In 

the second scenario, it is reasonable for 

consumers to believe that the terms they 

have agreed to are what was negotiated, 

and do not include additional charges 

for optional, undisclosed items— 

particularly items that would not benefit 

the consumer. If a dealer charges 

consumers for such items under such 

circumstances, the dealer is misleading 

the consumer. Misleading consumers 

about cost information is material.383 If 

consumers knew that a dealership was 

charging them for items from which 

they would not benefit, such knowledge 

likely would affect their commercial 

choices, including whether to continue 

with, or ultimately consummate, the 

vehicle sale or financing transaction.384

Such charges are also unfair. When 

charges for any add-on accompany the 

already lengthy and complex car-buying 

process, it is difficult to obtain consent 

that is truly express and informed.385

Rather than prohibiting all such charges 

or taking other measures, as specifically 

contemplated in the NPRM,386 however, 

this provision focuses on charges for 

add-ons that would not benefit the 

consumer. Charges for add-ons that 

would not benefit the consumer can cost 

consumers thousands of dollars and 

significantly increase the overall cost to 

the consumer in the transaction, 

including by increasing the amount 

financed and total of payments, thereby 

increasing the risk the consumer will 

ultimately default on repayment 


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387See, e.g., Complaint ¶¶ 25–28, Fed. Trade 

Comm’n v. N. Am. Auto. Servs., Inc., No. 1:22–cv– 

01690 (N.D. Ill. Mar. 31, 2022). 

388See, e.g., Auto Buyer Study, supra note 25, at 

13–15, 17–18. 

389See Removatron Int’l Corp. v. Fed. Trade 

Comm’n, 884 F. 2d 1489, 1497 (1st Cir. 1989) 

(‘‘Disclaimers or qualifications . . . are not 

adequate to avoid liability unless they are 

sufficiently prominent and unambiguous to change 

the apparent meaning of the claims and to leave an 

accurate impression. Anything less is only likely to 

cause confusion by creating contradictory double 

meanings.’’). 

390Even in the hypothetical scenario where some 

consumers could have avoided the injury because 

they understood that an add-on would not benefit 

them but wanted to pay extra for the add-on 

anyway, the dealer’s conduct in selling nonbeneficial add-ons would still be unfair because it 

substantially injures other consumers who do not 

wish to pay for items that would not benefit them 

and, as discussed in the SBP text, cannot reasonably 

avoid the harm, and no countervailing benefits 

outweigh the costs. See FTC v. Amazon.com, Inc., 

2016 U.S. Dist. LEXIS 55569, *15, *18–21 (W.D. 

Wash. Apr. 26, 2016) (finding unfairness even 

though some consumers could have avoided the 

charge). Additionally, consumers who truly wish to 

purchase add-ons that do not benefit them may still 

be able to do so directly from the add-on provider. 

391See Nat’l Auto. Dealers Ass’n et al., 

‘‘Voluntary Protection Products: A Model 

Dealership Policy’’ 5 (2019), https://www.nada.org/ 

regulatory-compliance/voluntary-protectionproducts-model-dealership-policy (explaining that 

when determining which voluntary protection 

products to offer to customers, ‘‘the dealership 

should have confidence in the value that the 

product offers to customers,’’ including that the 

dealership should understand ‘‘whether its 

coverage is already provided by another product 

being purchased by the customer,’’ and stating ‘‘[i]t 

is essential that customers have a clearly defined 

path to receiving such benefits.’’). 

392See 15 U.S.C. 57a(a)(1)(B) (the Commission 

‘‘may include requirements prescribed for the 

purpose of preventing’’ unfair or deceptive acts or 

practices). 

393See, e.g., Comment of Nat’l Consumer L. Ctr. 

et al., Doc. No. FTC–2022–0046–7607 at 30–31. 

Instead, advocates recommended that the 

Commission require a cooling-off period for addons, similar to that required by the Commission for 

door-to-door and other off-premises sales, which 

would grant consumers time to review the 

paperwork after the transaction, and to cancel 

unexpected or otherwise unwanted add-ons for a 

full refund. Id. This comment is addressed when 

discussing § 463.5(c) in SBP III.E.2(c). 

obligations.387 This injury is not 

reasonably avoidable by consumers 

when dealers are silent about such 

charges and simply include them in 

dense, lengthy contracts, as explained in 

detail in SBP II.B.2.388 If a dealer 

instead describes what the charges are 

for, such a description either 

deceptively states or implies that the 

add-on would benefit the consumer, or 

acknowledges the add-on would not 

benefit the consumer, the latter of which 

would create ‘‘contradictory double 

meanings’’ 389 and, if discovered, would 

still result in the dealer wasting the 

consumers’ time.390 Further, there are 

no benefits to consumers or to 

competition from charging consumers 

for add-ons that would not benefit them. 

Moreover, charging for non-beneficial 

products is inconsistent with industry 

guidance,391 and dealerships that profit 

from such sales place dealerships that 

do not at a competitive disadvantage. 

Thus, it is an unfair or deceptive act or 

practice for dealers, in connection with 

the sale or financing of vehicles, to 

charge for an add-on product or service 

if the consumer would not benefit from 

such an add-on product or service. This 

provision also serves to prevent 

misrepresentations prohibited by 

§ 463.3 of the Final Rule, including 

misrepresentations regarding material 

information about the costs or terms of 

purchasing, financing, or leasing a 

vehicle, and about any costs, limitation, 

benefit, or other aspect of an add-on. 

This provision further helps prevent 

dealers from failing to obtain express, 

informed consent for charges, as 

prohibited by § 463.5(c).392

(b) Undisclosed or Unselected Add-Ons 

The Commission’s proposed 

provisions relating to undisclosed or 

unselected add-on products or services, 

at § 463.5(b), prohibited dealers from 

charging for optional add-ons before 

undertaking certain measures. 

Specifically, proposed § 463.5(b)(1) 

prohibited dealers from charging for 

optional add-ons unless the dealers 

disclosed, and offered to consummate 

the transaction for, the cash price at 

which a consumer may purchase the 

vehicle without such add-ons. This 

proposed provision also required the 

consumer to decline to purchase the 

vehicle for the cash price without the 

add-on by means of a written 

declination, with date and time 

recorded, and signed by the consumer 

and a manager of the motor vehicle 

dealer. The proposed requirements of 

§ 463.5(b)(1) applied before the dealer 

referenced any aspect of financing for a 

specific vehicle, aside from the offering 

price, or before consummating a nonfinanced sale. Proposed § 463.5(b)(2) 

required similar steps before charging 

for any optional add-on in a financed 

transaction, including that the dealer 

disclose, and offer to consummate the 

transaction for, a vehicle’s cash price 

without optional add-ons plus the 

finance charge for such transaction, 

separately itemizing the components of 

the offer. This proposed provision also 

required a written, dated, time-stamped, 

and signed declination. Finally, 

proposed § 463.5(b)(3) required dealers 

to disclose the cost of the transaction, 

whether financed or not, without any 

optional add-ons, as well as the charges 

for the optional add-ons selected by the 

consumer, separately itemized. Each 

proposed provision required clear and 

conspicuous disclosure of specific 

information relating to optional add-ons 

and their associated costs. 

As discussed in the following 

paragraphs, the Commission has 

determined not to finalize the proposed 

provisions at § 463.5(b) regarding 

undisclosed or unselected add-ons. 

Many commenters described the likely 

benefits of such proposed provisions, 

and a number of commenters indicated 

how such provisions would be feasible, 

including by reference to similar 

disclosure regimes already in effect at 

the State or local level. Commenters also 

credited the Commission’s goals for 

such provisions. 

However, other commenters opposed 

these proposed provisions, contending 

they would be burdensome and timeconsuming. Others similarly expressed 

concern that, given the duration, 

complexity, and paperwork-heavy 

nature of motor vehicle sales and 

financing transactions, these provisions 

would not effectively resolve the 

problem of add-ons being sold without 

express, informed consumer consent.393

Having considered the comments, the 

Commission declines to include in this 

Final Rule the proposed provisions 

relating to undisclosed or unselected 

add-on products or services at 

§ 463.5(b). The Commission notes that 

various commenters were concerned 

about the extent to which this proposal 

would add documents and time to the 

transaction. If finalized, this would have 

been the sole provision in the Final Rule 

that affirmatively requires the dealer 

and consumer, in all circumstances, to 

view and sign additional documentation 

during the purchase, finance, or lease 

process, in what is already a documentheavy, time-consuming, and 

complicated transaction. The 

Commission further notes that, as a 

matter of existing law, dealers are 

already prohibited from engaging in 

misrepresentations regarding add-ons 

and from charging for add-ons without 

express, informed consent—conduct 

which the Final Rule prohibits as well. 

Accordingly, the Commission has 

determined not to include this provision 

in its Final Rule. 

The Commission will continue to 

monitor the motor vehicle marketplace 

for issues pertaining to unselected or 

undisclosed add-ons, and will consider 

implementing additional measures in 

the future if it determines such 

measures are necessary to address 

deceptive or unfair practices relating to 

add-ons. 


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394 Individual commenter, Doc. No. FTC–2022– 

0046–0794. 

395 Individual commenter, Doc. No. FTC–2022– 

0046–0671. 

396 Individual commenter, Doc. No. FTC–2022– 

0046–0073. 

397 Individual commenter, Doc. No. FTC–2022– 

0046–9917. 

398See discussion in SBP II.B.2. 

399See § 463.2(g) (defining ‘‘Express, Informed 

Consent’’ to include an affirmative act 

communicating ‘‘unambiguous assent to be 

charged’’); § 463.2(d) (defining ‘‘Clear(ly) and 

Conspicuous(ly)’’ to include a manner that is 

‘‘easily understandable’’). 

(c) Any Item Without Express, Informed 

Consent 

Section 463.5(c) of the proposed rule 

prohibited motor vehicle dealers, in 

connection with the sale or financing of 

vehicles, from charging consumers for 

any item unless the dealer obtains the 

express, informed consent of the 

consumer for the charge. Upon careful 

review and consideration of the 

comments, the Commission is finalizing 

this provision with one modification 

from its original proposal: the addition 

of language to the end of § 463.5(c) 

clarifying that the requirements in 

§ 463.5(c) ‘‘also are prescribed for the 

purpose of preventing the unfair or 

deceptive acts or practices defined in 

this part, including those in §§ 463.3(a) 

and (b), 463.4, and paragraph (a) of this 

section.’’ In addition, the Commission is 

finalizing the corresponding definition 

of ‘‘Express, Informed Consent,’’ now at 

§ 463.2(g). 

Many commenters favored the 

proposed provision and expressed the 

need for such a provision. For example: 

• In one instance a salesman who 

appeared busy and trying to help me 

efficiently navigate the process rushed 

me to sign a small paper, ‘‘just sign this 

quickly and we’ll be on our way,’’ I was 

told, without disclosure that they were 

selling me something that I did not 

want. I found it later and felt cheated.394

• They made me sign the sales bill on 

an electronic device, but the finance guy 

never pointed to me any number I was 

getting charge[d] for, and never pointed 

to me the total amount I was getting 

billed for. He seem[ed] to be in a hurry 

and he even told me he had people 

waiting for him to see. I think it was all 

planned to push the buyer to blindly 

sign the bill of sale without explaining 

anything because he was scrolling the 

electronic pages in a hurry and going 

straight to the sign box line. I thought 

I signed the agreed amount, I trust them, 

but, instead, they charge me for things 

I never agreed on. I went back to the 

dealer in less than 48 hours when I 

discovered the fraud and asked them to 

remove the extra fees they charged me 

for, they refused and they forced me to 

pay for it, I asked them and requested 

them to take the car back, they refused 

it again, at the end, they gave me a little 

bit of a discount, but, not compared to 

what I got charged for....395

• I am an attorney in private practice 

in NY representing consumers for 33 

years. It never ceases to amaze me how 

car dealers defraud honest trusting 

consumers substantial sums of money 

through various common deceptive and 

fraudulent practices ranging from 

altering documents, concealing 

documents, having consumers sign 

blank documents, lying about the 

material terms of the deal, altering the 

prices, adding on other contracts or 

items never discussed and selling 

vehicles with undisclosed damages and 

defects.396

• I have worked in the automotive 

business for many year[s]. I realize there 

are plenty of dealers around the US that 

have deceptive business practices, 

however this isn’t the case for all 

dealers. I believe there can be laws that 

can be put in place to help prevent 

dealers from adding additional backend 

products without consent or 

knowledge.397

Others supported the proposed 

provision and urged the Commission to 

include additional measures, such as a 

thirty-day ‘‘cooling-off’’ period within 

which consumers would be able to 

receive a full refund for any add-ons. A 

number of commenters, including 

consumer advocacy organizations, 

contended that such an additional time 

frame to review, and potentially cancel, 

any add-ons would counter the highpressure, confusing environment of the 

dealership F&I office and undermine 

any efforts to misrepresent add-on 

charges and coverage. Such commenters 

also indicated that such a provision 

would allow consumers the opportunity 

to compare prices and providers, and 

ultimately help increase competition in 

the marketplace. A few individual 

commenters requested that the 

Commission provide a cooling-off 

period not only for add-ons, but for the 

full vehicle purchase, and a prohibition 

on charging non-refundable deposits. 

The Commission agrees that a 

‘‘cooling off’’ provision could offer 

consumers additional protection from 

unwanted add-ons; however, additional 

information would assist the 

Commission in evaluating the potential 

benefits of such a provision. Such 

information might include, for example, 

what length a cooling-off period would 

need to be in order to offer adequate 

protection to consumers and to 

competition, or how consumers would 

most effectively be made aware of such 

a cooling-off period in the course of the 

complicated, lengthy, and documentheavy vehicle sale or financing 

transaction. Such information would be 

particularly relevant given that, in the 

Commission’s law enforcement 

experience, consumers have paid 

unauthorized charges on years-long 

contracts without learning of the 

charges.398 Accordingly, the 

Commission will continue to monitor 

the market to determine whether, after 

adoption of this Rule, it appears that a 

cooling-off period or other measures 

would be warranted. 

Other commenters, including 

consumer advocacy organizations, 

emphasized the importance of having 

disclosures and other documents 

available in the language used to 

negotiate the sale or lease. Here, the 

Commission notes that a dealer does not 

obtain the express, informed consent of 

the consumer if the consumer’s assent to 

a charge is ambiguous or based on a 

disclosure the consumer does not easily 

understand.399 Thus, if a dealer uses 

one language during negotiations and a 

different language in its contracts, and 

the consumer does not understand and 

assent to the charges, the dealer is 

violating § 463.5(c). Furthermore, the 

Commission notes that the definition of 

‘‘Express, Informed Consent’’ it is 

finalizing at § 463.2(g) requires, inter 

alia, a clear and conspicuous disclosure 

of what the charge is for and the amount 

of the charge, and the Commission’s 

definition of ‘‘Clear(ly) and 

Conspicuous(ly),’’ at § 463.2(d)(5), 

requires disclosures to appear ‘‘in each 

language in which the representation 

that requires the disclosure appears.’’ 

Other commenters, including a 

consumer advocacy organization and a 

consumer protection agency, 

recommended the Commission 

prescribe additional requirements for 

obtaining express, informed consent for 

charges, such as boxes for signatures 

and date-and-time recordings, and a 

requirement that dealers comply with 

the E-Sign Act. Other commenters also 

discussed obtaining consent through 

electronic signatures. Commenters 

including consumer advocacy 

organizations, for instance, reported 

cases wherein documents that were 

signed and supposedly provided 

electronically to consumers, were never 

actually delivered to the consumer, or 

delivered days later. According to these 

commenters, some consumers would 

sign on a small signature pad where 

they could not see the terms of the 

document being signed. Other 

practitioner commenters reported that 


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400See § 463.2(g) (defining ‘‘Express, Informed 

Consent’’ to include requiring clear and 

conspicuous disclosures of what the charge is for 

and the amount of the charge). 

401See, e.g., Fed. Trade Comm’n v. Amazon.com, 

Inc., 71 F. Supp. 3d 1158, 1163 (W.D. Wash. 2014). 

402Complaint ¶¶ 24–25, 29–49, 76, Fed. Trade 

Comm’n v. North Am. Auto. Servs., Inc., No. 1:22– 

cv–01690 (N.D. Ill. Mar. 31, 2022). 

403Complaint ¶¶ 17–19, 44, Fed. Trade Comm’n 

v. Liberty Chevrolet, No. 1:20–cv–03945 (S.D.N.Y. 

May 21, 2020). 

404Complaint ¶¶ 59–64, 91, Fed. Trade Comm’n 

v. Universal City Nissan, No. 2:16–cv–07329 (C.D. 

Cal. Sept. 29, 2016). 

405See, e.g., Complaint ¶¶ 29, 47, Fed. Trade 

Comm’n v. Yellowstone Cap. LLC, No. 1:20–cv– 

06023–LAK (S.D.N.Y. Aug. 3, 2020). 

406See, e.g., Complaint ¶¶ 11–14, 21, Bionatrol 

Health, LLC, No. C–4733 (F.T.C. Mar. 5, 2021). 

407See, e.g., Complaint ¶¶ 8–9, 42, Fed. Trade 

Comm’n v. T-Mobile USA, Inc., No. 2:14–cv–00967– 

JLR (W.D. Wash. July 1, 2014); Complaint ¶¶ 9, 49, 

Fed. Trade Comm’n v. AT&T Mobility, LLC, No. 

1:14–cv–03227–HLM (N.D. Ga. Oct. 8, 2014). 

408See, e.g., Fed. Trade Comm’n v. FleetCor 

Techs., Inc., 620 F. Supp. 3d 1268, 1333–38 (N.D. 

Ga. 2022); Fed. Trade Comm’n v. Amazon.com, 

Inc., No. C14–1038–JCC, 2016 WL 10654030, at *8 

(W.D. Wash. July 22, 2016); Fed. Trade Comm’n v. 

Inc21.com Corp., 745 F. Supp. 2d 975, 1005 (N.D. 

Cal. 2010), aff’d, 475 F. App’x 106 (9th Cir. 2012). 409 15 U.S.C. 8402(a)(2), 8403(2) (Restore Online 

Shoppers’ Confidence Act); 16 CFR 310.4(a)(7) 

(Telemarketing Sales Rule). 410The Commission has required express, 

informed consent provisions in orders against 

motor vehicle dealers and others. See Stipulated 

Order at Art. IV, Fed. Trade Comm’n v. Passport 

Auto. Grp., Inc., No. 8:22–cv–02670–TDC (D. Md. 

Oct. 18, 2022); Stipulated Order at Art. II, Fed. 

Trade Comm’n v. North Am. Auto. Servs., Inc., No. 

1:22–cv–01690 (N.D. Ill. Mar. 31, 2022) Stipulated 

Order at Art. II, Fed. Trade Comm’n v. Liberty 

Chevrolet, No. 1:20–cv–03945 (S.D.N.Y. May 22, 

2020); Stipulated Order at Art. III, Fed. Trade 

Comm’n v. Consumer Portfolio Servs., No. 14–cv– 

00819 (C.D. Cal. June 11, 2014). Similarly, the 

Commission has required such provisions in orders 

in other contexts. See, e.g., Stipulated Order at Art. 

III, Fed. Trade Comm’n v. Yellowstone Cap. LLC, 

No. 1:20–cv–06023–LAK (S.D.N.Y. May 4, 2021); 

Stipulated Order at Art. IV, Fed. Trade Comm’n v. 

Prog. Leasing, No. 1:20–cv–1668–JPB (N.D. Ga. Apr. 

22, 2020); Decision and Order at Art. VI, Bionatrol 

Health, LLC, No. C–4733 (F.T.C. Mar. 5, 2021); 

Stipulated Order at Art. I.E, Fed. Trade Comm’n v. 

BunZai Media Grp., Inc., No. CV 15–4527–GW 

(PLAx) (C.D. Cal. June 27, 2018); Stipulated Order 

at Art. I, Fed. Trade Comm’n v. T-Mobile USA, Inc., 

No. 2:14–cv–00967–JLR (W.D. Wash. Dec. 19, 2014); 

Stipulated Order at Art. I, Fed. Trade Comm’n v. 

AT&T Mobility, LLC, No. 1:14–cv–03227–HLM 

(N.D. Ga. Oct. 8, 2014); Decision and Order at Art. 

I, Google, Inc., No. C–4499 (F.T.C. Dec. 2, 2014); 

Consent Order, Apple Inc., No. C–4444 (F.T.C. Mar. 

27, 2014); cf. Fed. Trade Comm’n v. Kennedy, 574 

F. Supp. 2d 714, 720–21 (S.D. Tex. 2008) 

(consumers charged without express, informed 

consent for web services could not reasonably avoid 

harm when told that websites were ‘‘free’’). 

consumers’ electronic signatures were 

applied to contracts with very different 

terms from what the consumers believed 

they were accepting. An individual 

commenter recommended that dealers 

be required to provide paper documents 

where requested and consumers be 

allowed to consent on paper documents 

only, noting that elderly consumers or 

those for whom English is a second 

language may have difficulty with 

electronic signatures. Another 

individual commenter expressed the 

view that anyone needing assistance 

understanding the sales price or 

disclosures should be provided 

independent legal counsel at the 

dealership’s expense. 

While the Commission agrees that 

additional measures to promote express, 

informed consent could reduce the 

incidence of unauthorized charges and 

aid with enforcement efforts, the 

Commission has determined not to 

include in this Final Rule provisions 

that would require new forms during 

the vehicle sale or financing transaction. 

This way, law-abiding dealers would 

not have to change their practices for 

obtaining express, informed consent. 

Thus, the Commission declines to add 

further requirements, including those 

involving signature boxes or date-andtime recordings. Regarding the E-Sign 

Act, nothing in the Rule modifies 

compliance obligations under this Act. 

Instead, the Final Rule requires that, 

regardless of whether any given 

signature may have been obtained 

through electronic or other means, the 

dealer must obtain the express, 

informed consent of the consumer to 

any item for which the dealer charges 

the consumer. Furthermore, the 

Commission notes that a dealer has not 

obtained express, informed consent if a 

dealer has consumers sign an electronic 

keypad without seeing and 

understanding the terms, or applies 

their electronic signatures on contracts 

with terms different from those to which 

the consumer agreed.400 In such 

circumstances, the consumer has not 

demonstrated informed consent, or 

unambiguous assent to be charged, 

including because the signatures are not 

in close proximity to clear and 

conspicuous disclosures regarding the 

charges. 

Other commenters, including industry 

and dealership associations, claimed 

that the Commission did not provide 

enough information regarding what 

would constitute express, informed 

consent to charges, contending that 

additional detail was needed, or that the 

provision and associated definition of 

‘‘Express, Informed Consent’’ were too 

vague. The Commission notes, however, 

that the phrase ‘‘Express, Informed 

Consent’’ is consistent with existing 

legal standards.401 Commission 

enforcement actions over the years have 

challenged as deceptive or unfair the 

failure to get express, informed consent 

to charges, including in actions 

involving motor vehicle dealers and 

others: 

• Rushing consumers through stacks 

of auto paperwork more than 60 pages 

deep and requiring over a dozen 

signatures, where the paperwork 

included charges for unwanted addons.402

• Double charging certain fees 

without consumers’ knowledge or 

consent in highly technical documents 

presented at the close of a long 

financing process after an already 

lengthy process of selecting a vehicle 

and negotiating over its price.403

• Presenting consumers with 

preprinted sales and financing forms 

that included add-ons consumers had 

not requested, and rushing consumers 

through the closing process while 

directing them where to sign forms, 

including forms that were blank.404

• Charging consumers more for a 

product or service than they agreed to 

pay.405

• Charging consumers for more 

products than they requested.406

• Cramming charges onto consumers’ 

bills for services that the consumers did 

not request without the consumers’ 

knowledge or consent.407

Courts have found the failure to 

obtain express, informed consent to be 

a violation of the FTC Act.408 Other 

statutes and rules enforced by the 

Commission include express, informed 

consent requirements for consumer 

purchases,409 and similar provisions 

have appeared in Commission orders 

resolving charges that motor vehicle 

dealers or other sellers have levied 

unauthorized charges on consumers.410

In short, the prohibition in § 463.5(c) 

against charging consumers for products 

or services without their express, 

informed consent, and the 

corresponding definition of ‘‘Express, 

Informed Consent’’ in § 463.2(g) are 

consistent with existing law in 

articulating what motor vehicle dealers 

must do—and already should be doing. 

The Commission further notes that 

the proposed definition of ‘‘Express, 

Informed Consent’’ provided 

information regarding what was 

required by § 463.5(c): an affirmative act 

by the consumer communicating 

unambiguous assent to be charged, 

made after receiving and in close 

proximity to a clear and conspicuous 

disclosure, in writing, and also orally 

for in-person transactions, of the 

following: (1) what the charge is for; and 

(2) the amount of the charge, including, 

if the charge is for a product or service, 

all fees and costs to be charged to the 

consumer over the period of repayment 

with and without the product or service. 

As is evident from this language, there 


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411See NPRM at 42046. The term ‘‘item’’ includes 

‘‘a distinct part in an enumeration, account, or 

series’’ as well as ‘‘a separate piece of news or 

information.’’ See Item (defs. 1, 3), MerriamWebster.com Dictionary, https://www.merriamwebster.com/dictionary/item (last visited Sept. 14, 

2023). 

412See NPRM at 42046 (emphasis added). 

must be an affirmative act that itself 

conveys the consumer’s unambiguous 

assent to the specific charge: it must 

clearly and expressly communicate both 

that the consumer has been informed 

about the charge and consents to the 

charge. This act cannot be susceptible to 

alternative interpretations, i.e., that the 

consumer meant to communicate 

something other than the consumer’s 

authorization to be charged for the 

specific add-on or other item in 

question. For example, a consumer 

might ask, ‘‘how much would it cost to 

get the car with [a specific add-on]? ’’ 

Such a statement does not convey 

unambiguous assent to be charged for 

the mentioned add-on; rather, it could 

merely convey curiosity, interest, or a 

desire to evaluate options. Similarly, if 

a consumer responds to a salesperson’s 

description of an add-on by saying 

‘‘OK,’’ this response may merely 

confirm that the consumer had heard or 

understood information and does not 

indicate the consumer’s unambiguous 

assent to purchase, let alone be charged 

for, such an item. 

Relatedly, some commenters, 

including dealership associations, 

suggested that the addition, by the 

consumer, of a signature or set of 

initials, accompanied by a 

corresponding date can be partial 

evidence of an affirmative, or ‘‘Express,’’ 

act. The Commission notes that the 

extent to which these, or other, acts 

indicate ‘‘Express, Informed Consent’’ 

depends on circumstances and context. 

A consumer signing a lengthy document 

with pre-checked boxes does not, by 

itself, demonstrate express, informed 

consent. This is particularly so at the 

end of an hours-long transaction, at 

which point actions that, under other 

circumstances, may indicate assent are 

increasingly less likely to do so 

unambiguously, given that at the close 

of a transaction, consumers expect to be 

finalizing previously agreed-upon terms 

instead of discussing new products or 

services hours into the deal. For 

express, informed consent to be 

effective, the consumer must 

understand what a charge is for and the 

amount of the charge, including all costs 

and fees over the length of the payment 

period. A signed and dated document 

would not satisfy the requirement for 

express, informed consent, for example, 

if the consumer was directed to sign the 

final page of a contract or an electronic 

signature pad and the signed and dated 

document did not reflect the terms to 

which the consumer had agreed. In such 

cases, the signed and dated document 

does not represent the consumer’s 

unambiguous assent to be charged, 

made after receiving, and in close 

proximity to, a clear and conspicuous 

disclosure of what the charges are for 

and the amount of the charges. 

Some industry association 

commenters argued that the proposed 

definition was too prescriptive, and 

would require, for instance, video 

records to demonstrate compliance, or 

that the proposed language was 

overreaching, and requiring express, 

informed consent for every item on a 

contract would be complicated and 

time-consuming. The Commission notes 

again that, under current law, 

dealerships are already required to 

obtain consumers’ express, informed 

consent to charges. If dealers are already 

obtaining such consent, as is required 

by law, they need not take additional 

steps, such as by using a separate 

disclosure form or videos, or by 

spending additional time during the 

transaction to comply with this 

provision. 

A dealership association commenter 

requested examples of recordkeeping 

and best practices evidencing oral 

disclosures that would satisfy the 

requirement to obtain express, informed 

consent. The express, informed consent 

requirement and definition require the 

disclosure to be made in writing in 

addition to orally for in-person 

transactions. Furthermore, under other 

provisions of the Rule, such as the 

definition of ‘‘Clear(ly) and 

Conspicuous(ly)’’ at § 463.2(d)(7), 

dealers are prohibited from 

contradicting information that is 

required to be disclosed; thus, for 

example, dealers’ oral representations 

must be consistent with the written 

disclosure required for obtaining 

express, informed consent. Best 

practices for satisfying the requirement 

to obtain express, informed consent 

include presenting key information and 

finalizing actual terms early in the 

transaction—for example, by including 

full cost information, such as estimated 

taxes, costs of any selections made by 

the consumer, and any other 

components of cost, on dealer 

websites—and maintaining records that 

this was done. The Commission notes 

that, as a transaction progresses, 

consumers expect to be finalizing 

previously agreed-upon terms instead of 

discussing new charges and new 

products or services. In lieu of finalizing 

additional formal mandates in the Rule 

regarding recordkeeping and best 

practices evidencing express, informed 

consent, the Commission recognizes 

that industry members and other 

stakeholders will have significant room 

to develop self-regulatory programs and 

guidance tailoring these and other 

topics to the specifics of their business 

operations. 

Some dealership association 

commenters expressed concern that 

such a provision would be inconsistent 

with State laws and would complicate 

the car buying experience. While the 

Commission is not aware of any laws 

that allow dealers to charge consumers 

without their express, informed consent, 

and thus is not aware of any 

inconsistences with this provision, 

§ 463.9 of the Final Rule specifies what 

dealers must do in the case of actual 

conflicts with State law. State laws may 

provide more or less specific 

requirements—including requirements 

that provide greater protection—as long 

as they do not conflict with the Final 

Rule, as set forth in § 463.9. The 

Commission also notes that to the extent 

there is overlap with existing law, there 

is no evidence that duplicative 

prohibitions against deceptive and 

unfair conduct, including prohibitions 

against charging consumers without 

express, informed consent, have harmed 

consumers or competition. 

Commenters, including an industry 

association, inquired whether the term 

‘‘item,’’ as used in this proposed 

provision, differed from the term ‘‘Addon Product or Service’’ defined in 

§ 463.2 of the Commission’s proposal. 

The industry association also argued 

that requiring express, informed consent 

is beyond what is required under the 

Truth in Lending Act. The Commission 

responds as follows: Consistent with its 

plain meaning, the term ‘‘item’’ is 

broader than, and thereby encompasses, 

the term ‘‘Add-on Product(s) or 

Service(s),’’ which is limited by its 

definition in § 463.2 of the Final 

Rule.411 As proposed, § 463.5 addressed 

‘‘Dealer Charges for Add-ons and Other 

Items.’’ 412 It did so in recognition of the 

fact that add-ons are one type of ‘‘item,’’ 

but that ‘‘Other Items’’ for which a 

dealer might charge exist as well. Thus, 

as proposed, § 463.5 applied to charges 

generally, whether such charges were 

for an add-on or for another item. As 

previously discussed, charging 

consumers without their express, 

informed consent to the charge has long 

been an unfair or deceptive practice 

under the FTC Act. This has been the 

case regardless of what the charge is for. 

Accordingly, dealers already should be 

obtaining consumers’ express, informed 


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413This commenter also contended that this 

provision would result in many disclosures when 

combined with proposed § 463.5(b). Comment of 

Nat’l Auto. Dealers Ass’n, Doc. No. FTC–2022– 

0046–8368 at 98–99. As discussed previously, the 

Commission declines to finalize proposed 

§ 463.5(b). 

414See NPRM at 42045. 

415See Holder Rule, 16 CFR 433.2. 416See Holder Rule, 16 CFR 433.2; see also Fed. 

Trade Comm’n, Advisory Opinion Regarding F.T.C. 

Trade Regulation Rule Concerning Preservation of 

Consumers’ Claims and Defenses (May 3, 2012), 

https://www.ftc.gov/system/files/documents/ 

advisory_opinions/16-c.f.r.part-433-federal-tradecommission-trade-regulation-rule-concerningpreservation-consumers-claims/ 

120510advisoryopinionholderrule.pdf (last visited 

Dec. 5, 2023). 

417See Complaint ¶¶ 29–32, Fed. Trade Comm’n 

v. Tate’s Auto Ctr. of Winslow, Inc., No. 3:18-cv08176–DJH (D. Ariz. July 31, 2018) (alleging a 

financing entity ceased business with Tate’s Auto 

Center after concerns about loan falsification and 

substantial losses). 

418See SBP II.B.2. 

consent for charges, whether it is for an 

Add-on or any other item, regardless of 

what may be required under other laws. 

Commenters, including this same 

industry association commenter, also 

questioned how a dealership would 

calculate ‘‘the amount of the charge . . . 

with and without the product or 

service’’ as would be required under 

proposed § 463.2(g)(2), as well as how 

this proposed provision would work in 

a non-financed transaction.413

Conversely, an individual commenter 

stated that current F&I practices already 

routinely disclose the proposed charges 

with and without the product or service. 

The Commission notes that its proposed 

definition of ‘‘Express, Informed 

Consent’’ plainly required disclosure of 

the ‘‘amount of the charge, including, if 

the product is for a product or service, 

all fees and costs to be charged to the 

consumer over the period of repayment 

with and without the product or 

service.’’ 414 The amount the dealer will 

charge the consumer over the period of 

repayment with the product or service 

is the total charge for that product or 

service. In the event the charge is for an 

optional product or service, the amount 

the dealer will charge the consumer 

without the product or service is zero; 

in the event the charge is for a nonoptional item, the dealer’s disclosure 

must clearly indicate as such. Regarding 

non-financed transactions, as with a 

financed transaction, the amount the 

dealer will charge the consumer over 

the period of repayment with the 

product or service is the total charge for 

that product or service. If the period of 

repayment is such that full payment is 

due upon receipt of the vehicle, the 

amount required to be disclosed is the 

total charge for that product or service 

to be paid upon receipt of the vehicle. 

The amount the dealer will charge the 

consumer without the product or 

service, if it is optional, is zero; in the 

event the charge is for a non-optional 

item, the dealer’s disclosure must 

clearly indicate such. Sharing this basic 

information with consumers—how 

much they will pay for the item and 

how much they will pay without it— 

addresses practices, such as hiding addon charges, misrepresenting whether 

such charges are required in connection 

with the vehicle sale or financing 

transaction, or misrepresenting how 

such charges influence the total of 

payments for the transaction. 

An industry association comment 

stated that, were the Commission’s 

proposal to become final, the 

Commission would be able to obtain 

monetary relief from dealers for harmed 

consumers, and argued that Holder Rule 

protections for such consumers thus 

would be unnecessary.415 Accordingly, 

it urged the Commission to modify its 

proposal to include a safe harbor for 

contract assignees, which it argued 

would be incapable of detecting 

deficiencies in sale or lease transactions, 

such as dealer misrepresentations or a 

lack of consumer consent, unless those 

deficiencies were apparent from the face 

of the contract. Here, the Commission 

emphasizes that no provision of the 

Final Rule changes the status quo 

regarding the responsibilities of 

assignees or other subsequent holders of 

motor vehicle financing under the 

Holder Rule. The Commission did not 

include, when enacting the Holder Rule, 

a safe harbor from liability for claims or 

defenses based on their capability of 

detection by such assignees or other 

subsequent holders, and the 

Commission does not believe on the 

basis of comments received in the 

course of this rulemaking that such a 

change would be warranted as a 

consequence of finalizing this Rule. The 

Holder Rule provides important 

protections for harmed consumers, even 

when there is law that allows the 

Commission or other law enforcers to 

obtain remedies for harmed consumers, 

including where the consumers are 

seeking recourse from, or defending 

themselves against, parties that have not 

been the subject of law enforcement 

actions.416 Furthermore, while the 

Commission understands that dealers 

are often in the best position to ensure 

they have, in the first instance, obtained 

a consumer’s express, informed consent 

for charges, there are steps an assignee 

or other subsequent holder of the 

consumer credit contract, such as a 

third-party financing entity, can take to 

address concerns about contracts 

obtained without express, informed 

consent. For example, if a financing 

entity receives complaints from 

consumers or others that specific 

charges were obtained without 

authorization or sees that charges for a 

particular item are occurring 

substantially more frequently at a given 

dealership than at others, the financing 

company can take steps to make sure 

the dealer is obtaining express, 

informed consent. Further, if a financing 

entity is concerned that a dealership 

may be acting in violation of the Final 

Rule, it may arrange its business 

relationships accordingly, including by 

altering or withdrawing its business 

from the dealership.417

Another industry association 

commenter asked for clarification 

regarding the extent to which particular 

rules are necessary to obtain customer 

authorization for charges, thus reflecting 

what is already necessary under State or 

Federal law, as opposed to preventative 

measures that the Commission 

otherwise deems necessary. The 

Commission notes that this provision is 

consistent with the requirements of the 

FTC Act, which already prohibits 

charging consumers without express, 

informed consent, and is needed to 

address unfair and deceptive conduct. 

As the Commission set forth in its 

NPRM, the length and complexity of 

motor vehicle transactions has created 

an environment rife with deceptive and 

unfair conduct. Consumer complaints 

and the Commission’s extensive law 

enforcement experience, among other 

sources, indicate that some dealers have 

added thousands of dollars in 

unauthorized charges to motor vehicle 

transactions, including for add-ons 

consumers had already rejected.418 Such 

issues are exacerbated when, for 

example, preprinted dealer contracts 

automatically include charges for 

optional add-ons that the consumer has 

not selected; when dealers rush 

consumers through stacks of paperwork 

with buried charges after a lengthy 

process; when dealers misinform 

consumers that the documents they are 

signing represent agreed-upon terms; or 

when dealers ask consumers to sign 

blank documents. 

Charging consumers without their 

express, informed consent causes 

substantial injury to consumers in the 

amount of the unauthorized charge. 

This injury is not reasonably avoidable 

when dealers do not clearly and 

conspicuously disclose to the consumer 

what the charge is for and the amount 

of the charge, since this information is 

within the unilateral control of the 


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419See, e.g., Fed. Trade Comm’n v. FleetCor 

Techs., Inc., 620 F. Supp. 3d 1268, 1334–39 (N.D. 

Ga. Aug. 9, 2022); Fed. Trade Comm’n v. Inc21.com 

Corp., 745 F. Supp. 2d 975, 1001–03 (N.D. Cal. 

Sept. 21, 2010). 

420See 15 U.S.C. 57a(a)(1)(B) (the Commission 

‘‘may include requirements prescribed for the 

purpose of preventing’’ unfair or deceptive acts or 

practices). 

dealer. There are no countervailing 

benefits to consumers or to competition 

that outweigh this injury. To the 

contrary, if all dealers obtained express, 

informed consent to charges, they 

would not lose business to dealers who 

do not do so. 

Charging for an item without 

obtaining the consumer’s express, 

informed consent is also a deceptive 

practice under section 5 of the FTC 

Act.419 When a dealer presents a 

consumer with whom the dealer has 

negotiated a finalized sale or financing 

contract, the dealer is representing that 

the contract includes only charges that 

were negotiated and to which the 

consumer agreed. If the dealer failed to 

obtain the consumer’s express, informed 

consent, however, such a representation 

is false or misleading. It is also material: 

if consumers knew that they had not, in 

fact, authorized a charge that the dealer 

nonetheless included in their sales or 

financing contract, this information 

likely would have affected the 

consumers’ willingness to continue to 

engage with the dealership, as well as 

consumers’ willingness to select and 

pay for any such item. The express, 

informed consent requirement also 

serves to prevent the misrepresentations 

prohibited by § 463.3 of the Final Rule— 

including misrepresentations regarding 

material information about the costs or 

terms of purchasing, financing, or 

leasing a vehicle, and about any costs, 

limitation, benefit, or other aspect of an 

add-on.420 The requirement also serves 

to prevent violations of the disclosure 

requirements in § 463.4 and the 

prohibition against charging for nonbeneficial add-ons in § 463.5(a). By 

operation of the definition of ‘‘Express, 

Informed Consent’’ at § 463.2(g), this 

requirement reduces the likelihood that 

dealers will fail to disclose what a given 

charge is for and the amount of the 

charge including all fees and costs to be 

charged to the consumer over the period 

of repayment with and without the 

charged item, thereby making the 

disclosures of information required by 

§ 463.4 more likely. The same is true 

regarding the requirements of § 463.5(a): 

the requirement that dealers obtain 

informed and unambiguous assent to be 

charged for each product or service 

makes it less likely that dealers will 

charge consumers for items from which 

they would not benefit; consumers 

typically do not provide informed, 

unambiguous assent to be charged for 

additional products from which they 

could not benefit unless they are led to 

believe, directly or by omission, that 

these products would be beneficial. 

Thus, the Commission has 

determined to finalize proposed 

§ 463.5(c), prohibiting dealers from 

charging a consumer for any item unless 

the dealer obtains the express, informed 

consent of the consumer for the charge, 

with the addition of language clarifying 

that the requirements in § 463.5(c) ‘‘also 

are prescribed for the purpose of 

preventing the unfair or deceptive acts 

or practices defined in this part, 

including those in §§ 463.3(a) and (b), 

463.4, and paragraph (a) of this section.’’ 

In addition, the Commission has 

determined to finalize its definition of 

‘‘Express, Informed Consent,’’ now at 

§ 463.2(g), substantively as proposed. 

F. § 463.6: Recordkeeping 

Proposed § 463.6 required motor 

vehicle dealers to create and retain, for 

a period of twenty-four months from the 

date the record is created, all records 

necessary to demonstrate compliance 

with the Final Rule, including those in 

five enumerated paragraphs. This 

proposed section further provided that 

dealers may retain such records in any 

legible form, and in the same manner, 

format, or place as they may already 

keep such records in the ordinary 

course of business, and that failure to 

keep all required records required will 

be a violation of the Rule. As examined 

in additional detail in the following 

analysis, several commenters supported 

the proposal; several urged the 

Commission to adopt broader 

recordkeeping requirements; and several 

other commenters argued that the 

proposed requirements were too broad. 

After careful consideration, the 

Commission has determined to adopt 

these recordkeeping requirements 

largely as proposed, with two 

conforming modifications to remove 

references to proposed provisions not 

adopted in the Final Rule; one 

typographical modification to include a 

serial comma for consistency; and minor 

textual changes to ensure consistency 

with the defined terms at § 463.2(e) and 

(f) by replacing ‘‘Motor Vehicle Dealer’’ 

with ‘‘Covered Motor Vehicle Dealer’’ or 

‘‘Dealer,’’ replacing ‘‘Motor Vehicle’’ 

with ‘‘Vehicle,’’ and capitalizing 

‘‘vehicle.’’ In the following paragraphs, 

the Commission discusses each 

proposed recordkeeping requirement, 

the comments the Commission received 

on each such requirement as well as the 

Commission’s responses to such 

comments, and the provisions the 

Commission is finalizing. 

Section 463.6(a) of the proposed rule 

required motor vehicle dealers to create 

and retain, for a period of twenty-four 

months from the date the record is 

created, all records necessary to 

demonstrate compliance with the Final 

Rule, including (1) copies of materially 

different advertisements, sales scripts, 

training materials, and marketing 

materials regarding the price, financing, 

or lease of a motor vehicle that the 

dealer disseminated during the relevant 

time period; (2) copies of all materially 

different add-on lists and all documents 

describing such products or services 

that are offered to consumers; (3) copies 

of all purchase orders; financing and 

lease documents with the dealer signed 

by the consumer, whether or not final 

approval is received for a financing or 

lease transaction; and all written 

communications relating to sales, 

financing, or leasing between the dealer 

and any consumer who signs a purchase 

order or financing or lease contract with 

the dealer; (4) records demonstrating 

that add-ons in consumers’ contracts 

meet the requirements of § 463.5, 

including copies of all service contracts, 

GAP agreements, and calculations of 

loan-to-value ratios in contracts 

including GAP agreements; and (5) 

copies of all written consumer 

complaints relating to sales, financing, 

or leasing, inquiries related to add-ons, 

and inquiries and responses about 

vehicles referenced in § 463.4. 

Proposed § 463.6(b) provided that a 

motor vehicle dealer may keep the 

required records ‘‘in any legible form, 

and in the same manner, format, or 

place as they may already keep such 

records in the ordinary course of 

business.’’ This proposed paragraph also 

specified that failure to keep all records 

required under paragraph (a) of this 

section would be a violation of the Final 

Rule. 

Many commenters, including State 

regulators, legal aid groups, consumer 

advocacy organizations, and individual 

commenters, endorsed the 

Commission’s proposed rule generally, 

without criticism of its proposed 

recordkeeping requirements. In 

addition, one such association 

commenter expressly stated that it 

supported each of the proposed 

recordkeeping provisions, explaining 

that these proposed provisions were 

needed to address ‘‘bait and switch’’ 

tactics, provide evidence of whether 

required disclosures are made, and 

identify consumers harmed by illegal 


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421Comment of Nat’l Consumer L. Ctr. et al., Doc. 

No. FTC–2022–0046–7607 at 48–49; see also 

Comment of N.Y.C. Dep’t of Consumer and Worker 

Prot., Doc. No. FTC–2022–0046–7564 at 6 (noting 

retention requirements are vital to investigations, 

particularly with respect to mandatory disclosures). 

422See, e.g., Telemarketing Sales Rule, 16 CFR 

310.5; Business Opportunity Rule, 16 CFR 437.7. 

423See § 463.2(j). 

424One industry commentor questioned the 

utility of records in FTC actions. This commenter 

also stated that the FTC is not a supervisory agency 

and thus should not be seeking to create a records 

inspection scheme. As noted previously, 

recordkeeping requirements are necessary here to 

prevent unfair and deceptive practices by 

mandating preservation of written materials that 

reflect dealer transactions and to enable effective 

enforcement of the Rule. The Commission has the 

authority to prescribe rules for the purpose of 

preventing unfair or deceptive acts or practices. See 

15 U.S.C. 57a(a)(1)(B). The Commission routinely 

includes recordkeeping requirements in rules, see, 

e.g., Telemarketing Sales Rule, 16 CFR 310.5; 

Business Opportunity Rule, 16 CFR 437.7, and 

courts have ordered companies to maintain records 

in FTC orders, see, e.g., Final Judgment at 20–21, 

Fed. Trade Comm’n v. Elegant Sols., Inc., No. 8:19– 

cv–01333–JVS–KES (C.D. Cal., July 17, 2020); Order 

for Permanent Injunction and Monetary Judgment at 

27–28, Fed. Trade Comm’n. v. Consumer Defense, 

LLC, No. 2:18–cv–00030–JCM–BNW (D. Nev. Dec. 5, 

2019). 

425See, e.g., Va. Code sec. 46.2–1529 (requiring 

retention for five years of ‘‘all dealer records’’ 

regarding, among other things, vehicle purchases, 

sales, trades, and transfers of ownership). 

practices.421 Here, the Commission 

notes that record retention requirements 

are necessary to preserve written 

materials that reflect the transactions 

between the dealer and purchasing 

consumers, and to assist the 

Commission to enforce its Rule by 

enabling it to ascertain whether dealers 

are complying with its requirements; to 

identify persons who are involved in 

any challenged practices; and to identify 

consumers who may have been injured. 

Such requirements are particularly 

important in the case of complicated, 

lengthy, and document-heavy vehicle 

sale or financing transactions, in which 

law violations may be more difficult for 

consumers and others to detect. Indeed, 

the Commission routinely includes 

recordkeeping requirements in its 

rules.422

Several commenters, including 

consumer advocacy organizations, 

consumer protection agencies, a group 

of State attorneys general, and 

individual commenters, urged the 

Commission to consider expanding the 

proposed twenty-four-month record 

retention period, noting that the 

contract period for most retail 

installment contracts is much longer 

than twenty-four months, and that State 

limitations periods for claims relating to 

the subject matter of the Commission’s 

proposed rule often extend well beyond 

this proposed timeframe. Numerous 

such commenters, for instance, 

recommended a record retention period 

of the longer of seven years or the length 

of the consumer’s financing contract. 

The Commission understands that 

there would be benefits to a longer 

period, especially given that vehicle 

financing repayment terms are often far 

longer than twenty-four months, and 

that many dealers likely already 

maintain, in the ordinary course of 

business, the types of records set forth 

in proposed § 463.6. The Commission, 

however, is also mindful that other 

commenters raised concerns about the 

costs associated with record retention, 

including costs that would increase 

with any extension of the retention 

period. Rather than limiting the types of 

records to be maintained, and thus 

hampering the Commission’s ability to 

ensure compliance with the Final Rule, 

the Commission has determined to 

adopt a retention period that is shorter 

than the time period of many motor 

vehicle financing contracts, in order to 

minimize burdens. In the event the 

Commission subsequently determines 

that a twenty-four-month retention 

period is insufficient to ensure 

compliance with this Rule, the 

Commission may consider other 

measures in the future. 

In addition, a number of commenters, 

including consumer advocacy 

organizations, recommended additional 

provisions, including an explicit 

requirement to retain languagetranslated versions of required records, 

and a requirement to make retained 

records available to consumers upon 

request. Regarding language-translated 

versions of required records, 

§ 463.6(a)(3), (a)(4), and (a)(5) require 

dealers to retain copies of ‘‘all’’ listed 

records, while § 463.6(a)(1) mandates 

that dealers retain ‘‘Materially different’’ 

copies of records. Thus, for the records 

listed in § 463.6(a)(3), (a)(4), and (a)(5), 

any translations are required to be 

retained; in the case of § 463.4(a)(1), the 

Rule requires materially different 

translations to be maintained.423 The 

Commission therefore has determined 

not to add to the recordkeeping section 

of the Rule a standalone requirement to 

retain translated versions. The 

Commission will continue to monitor 

the marketplace to determine whether 

additional action or protections are 

warranted. 

The Commission also declines to 

include in this Final Rule an additional 

requirement that dealers provide 

retained records to consumers upon 

request. Such a requirement may be 

beneficial; however, it is not clear to 

what extent dealers currently refuse to 

provide consumers with such records, 

and there is insufficient information in 

the rulemaking record to assess the 

impact of—or need for—such a 

modification of the existing requirement 

to retain and preserve materials in the 

Rule. The Commission will continue to 

monitor the motor vehicle marketplace, 

including issues relating to information 

access, to determine whether additional 

action or protections are warranted. 

Other commenters—particularly auto 

industry participants—objected to the 

proposed recordkeeping 

requirements.424 Several such 

commenters contended that the 

proposed requirements were new 

obligations that went beyond specific 

State recordkeeping requirements. Some 

dealership associations argued that 

existing State recordkeeping 

requirements are sufficient and that a 

Commission rule was unnecessary. One 

such commenter argued that the 

existence of overlapping, but different, 

State and Federal standards may make 

compliance difficult for motor vehicle 

dealers. 

In response, the Commission notes 

that the recordkeeping requirement is 

necessary to ensure motor vehicle dealer 

compliance with the Final Rule, and 

therefore may have different 

requirements than State standards. To 

provide dealers with flexibility and to 

minimize burden, however, the 

proposed rule permitted dealers to 

retain records ‘‘in any legible form,’’ 

including ‘‘the same manner, format, or 

place’’ in which records are kept in the 

ordinary course of business. To the 

extent dealers have fashioned their 

ordinary record retention practices 

around State recordkeeping standards, 

the proposed rule thus allowed for 

record retention in the form required by 

State recordkeeping standards. 

Additionally, as discussed in the 

following paragraphs, the Commission 

is not finalizing recordkeeping 

requirements that dealers maintain Addon Lists and Cash Price without 

Optional Add-ons disclosures and 

declinations, further reducing burdens. 

One industry association commenter 

suggested that this requirement would 

increase risks of identity theft and raise 

privacy concerns. The Commission 

notes that many dealers already have 

obligations to retain customer records 

under State law.425 Dealers are required 

to have systems in place to protect this 

information, given that the failure to 

adequately protect such information 

violates existing law, including section 

5 of the FTC Act and the Commission’s 

Standards for Safeguarding Customer 

Information, also known as the 


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426 15 U.S.C. 45; 16 CFR 314; see also Decision 

and Order, LightYear Dealer Techs., LLC, No. C– 

4687 (F.T.C. Sept. 3, 2019) (consent order); FTC 

Business Guidance, ‘‘FTC Safeguards Rule: What 

Your Business Needs to Know,’’ https://

www.ftc.gov/business-guidance/resources/ftcsafeguards-rule-what-your-business-needs-know 

(last visited Dec. 5, 2023). 

Safeguards Rule.426 Thus, to the extent 

the Final Rule requires dealers to collect 

personal information beyond that which 

they are already collecting, they should 

already have systems in place to protect 

such information. 

Some commenters raised concerns 

about the requirement in proposed 

§ 463.6(a)(1) to preserve, inter alia, 

materially different advertisements, 

sales scripts, and marketing materials. 

One such dealership association 

commenter argued that dealers should 

not be required to retain sales scripts, 

training materials, and marketing 

materials, while another dealership 

association commenter argued that 

dealers should not be required to 

maintain advertisements, positing that 

these materials are publicly available 

and could be requested from advertisers 

as concerns arise with respect to 

particular ads. Commenters including 

two dealership organizations argued 

that digital advertisements would be 

difficult to retain, with one such 

commenter urging the Commission to 

adopt an approach that would permit 

dealers to retain a representative 

example of a vehicle advertisement and 

the underlying data used to populate 

vehicle ads. The other such commenter 

suggested that the proposed 

recordkeeping requirement could be 

unduly burdensome because ‘‘all 

materials’’ related to its online 

inventory ‘‘could be deemed some 

version of materially different 

advertisements and marketing materials 

regarding price or financing of a motor 

vehicle.’’ Another dealership 

organization commenter raised a similar 

concern about website listings and 

questioned whether the term 

‘‘advertisement’’ includes television ads 

and email campaigns. 

After considering these comments, the 

Commission has determined that the 

proposed recordkeeping requirements in 

§ 463.6(a)(1) strike an appropriate 

balance by requiring the retention of 

materials needed to enable effective 

enforcement while only requiring such 

records to be retained for twenty-four 

months and in any legible form. 

Advertisements and marketing materials 

regarding the price, financing, or lease 

of a motor vehicle are critical to 

determining compliance with virtually 

every provision in the Final Rule, as 

they are often consumers’ first contact 

in the vehicle-buying or -leasing 

process, and often contain key 

representations about pricing, 

payments, and other terms. Scripts and 

training materials are important 

evidence of a dealer’s compliance 

program regarding the Final Rule’s 

requirements, including of the 

information and instructions that 

dealership staff are given with respect to 

the areas that are addressed by the Final 

Rule. Furthermore, regarding the 

contention that advertisements are 

available publicly or could be requested 

separately, a core purpose of the 

recordkeeping requirement is to ensure 

that disseminated representations are 

preserved for a sufficient period of time 

to allow for compliance concerns to be 

addressed. A compliance regime that, 

contrary to the Commission’s proposal, 

allowed the destruction of 

advertisements after they have been 

publicly presented, or that requires the 

Commission to try to obtain materials 

from advertisers or third parties, would 

not serve this purpose. 

With respect to the scope of 

advertisements that must be retained, 

the recordkeeping requirement does not 

differ with respect to the form of the 

advertisement, since the same 

enforcement concerns are raised 

regardless of whether an ad is presented 

in digital, hardcopy, email, audio, 

televised, or other format. The 

recordkeeping requirement does not 

require all advertisements to be 

retained, however, as § 463.6(a)(1) 

specifically includes the proviso that ‘‘a 

typical example of a credit or lease 

advertisement may be retained for 

advertisements that include different 

Vehicles, or different amounts for the 

same credit or lease terms, where the 

advertisements are otherwise not 

Materially different.’’ Regarding the 

commenter’s proposal to allow dealers 

to retain a ‘‘representative’’ example of 

an advertisement with digital data that 

can recreate different versions of the 

advertisement, this provision, as 

proposed, permitted dealers to preserve 

typical examples of advertisements in 

this manner so long as such records are 

already kept in in the ordinary course of 

business, capture all differences that 

would be material to consumers, and 

accurately show how the offers have 

been presented to consumers. Materially 

different website listings, television 

advertisements, and email campaigns 

must be preserved, consistent with the 

plain meaning of the terms used in the 

section. 

With respect to proposed 

§ 463.6(a)(2)’s requirement to maintain 

copies of all materially different add-on 

lists, an industry association commenter 

contended that retaining materially 

different add-on lists would be difficult, 

given the scope of the term ‘‘Add-on’’ 

and the consequent size of the list as 

well as its dynamic nature. One 

dealership association commenter 

argued that the proposed requirement to 

retain add-on lists was unnecessary, 

contending that concerns could be 

addressed as they arise, and requesting 

to replace this proposed requirement 

with a requirement to retain a master 

copy of each insurance product, service 

contract, or other add-on in the dealer’s 

general business file. After carefully 

considering the comments, the 

Commission has determined not to 

finalize the proposed requirement at 

§ 463.4(b) to disclose an add-on list, and 

consequently will not be finalizing the 

proposed requirement at § 463.6(a)(2) 

that dealers retain materially different 

add-on lists. 

Several commenters, including 

industry associations, argued that 

certain of the proposed requirements to 

preserve written material, including 

written communications under 

proposed § 463.6(a)(3) and written 

consumer complaints, and inquiries and 

responses about vehicles referenced in 

§ 463.4, under proposed § 463.6(a)(5), 

would be unduly burdensome. 

Generally, these commenters contended 

that the various ways consumers may 

communicate with dealers—including 

chat features on a dealer’s website, 

emails and text messages with 

salespersons, and social media posts— 

would require the development of new 

and onerous preservation systems. A 

dealership organization commenter 

raised concerns about retaining text 

messages and emails, contending that 

salespeople may use their personal 

phones and email addresses, even if the 

dealership has policies against such use. 

One industry association commenter 

argued that third parties might have 

records related to add-ons and that this 

provision should only apply to 

‘‘complaints’’ relating to add-ons 

instead of ‘‘inquiries’’ relating to addons. One dealership association 

commenter argued that dealers should 

not be required to retain consumer 

complaints, contending it should be the 

businesses’ decision whether to 

maintain such materials, and also 

arguing that the Rule should not require, 

under proposed § 463.6(a)(4), the 

preservation of materials such as pricing 

options presented to consumers, 

contending that such materials should 

be limited to the two parties to the 

agreement. 

After considering these comments, the 

Commission has determined to finalize 

requirements to retain written materials 


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658 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

427As noted previously, a dealership association 

commenter argued that dealers should not be 

required to preserve complaints and certain add-on 

materials, contending that it should be a business 

decision whether to retain such records. The 

Commission declines to substantively modify these 

requirements from the Commission’s original 

proposal, given the importance of these materials in 

ensuring compliance with the other requirements of 

the Rule. 

428See SBP II.B (discussing how complaints 

represent the tip of the iceberg in terms of actual 

consumer harm). 429This is consistent with the Commission’s prior 

enforcement order practice. See, e.g., Stipulated 

Order at 25, Fed. Trade Comm’n v. N. Am. Auto. 

Servs., Inc., No. 1:22–cv–0169 (N.D. Ill. Mar. 31, 

2022) (requiring retention of ‘‘records of all 

consumer complaints and refund requests, whether 

received directly or indirectly, such as through a 

third party, and any response’’). 

430The term ‘‘written’’ means ‘‘made or done in 

writing.’’ See Written, Merriam-Webster.com 

Dictionary, https://www.merriam-webster.com/ 

dictionary/written (last visited Dec. 5, 2023). The 

term ‘‘consumer’’ includes ‘‘one that utilizes 

economic goods.’’ See Consumer (def. a), MerriamWebster.com Dictionary, https://www.merriamwebster.com/dictionary/consumer (last visited Dec. 

5, 2023). The term ‘‘complaint’’ includes an 

‘‘expression of grief, pain, or dissatisfaction,’’ 

‘‘something that is the cause or subject of protest 

or outcry,’’ and ‘‘a formal allegation against a 

party.’’ See Complaint (defs. 1, 2a, 3), MerriamWebster.com Dictionary, https://www.merriamwebster.com/dictionary/complaint (last visited Dec. 

5, 2023). 

431See SBP II.B. 

432See 15 U.S.C. 45(a). 

under § 463.6(a)(3), (4), and (5), with a 

limiting modification to § 463.6(a)(4). 

These requirements are necessary to 

address unfair and deceptive practices 

by mandating that dealers preserve 

written materials that reflect the 

transactions between the dealer and 

purchasing consumers, and to assist the 

Commission in its enforcement of the 

Rule.427 Such materials are particularly 

important given that the vast majority of 

consumers do not file a complaint, and 

with hidden charges, many consumers 

never know about the illegal conduct in 

the first place.428 For instance, as 

explained in SBP II.B, a survey of one 

dealership group’s customers showed 

that 83% of the respondents were 

subject to the dealer’s unlawful 

practices related to add-ons. This equals 

16,848 consumers—far more than the 

391 complaints received against the 

dealer over the time period covered by 

the survey. 

To minimize burden, as previously 

noted, the retention requirements are for 

a period of twenty-four months. Further, 

as stated previously, § 463.6(b) permits 

dealers to retain records ‘‘in any legible 

form,’’ which could, for example, 

include using the backup and export 

features that already exist in many 

social media services, email platforms, 

chat platforms, and text systems, instead 

of creating entirely new systems. 

Regarding dealers that use third parties 

to administer add-ons, commenters did 

not explain why they cannot access 

records related to add-ons from these 

parties.429 Further, altering the language 

in the provision to apply to 

‘‘complaints’’ rather than ‘‘inquiries’’ 

related to add-ons could invite 

arguments that consumer statements, 

such as, ‘‘Why was I charged for this 

add-on that I did not know about?’’ are 

not ‘‘complaints,’’ but simply 

‘‘inquiries.’’ With respect to the use of 

salespeople’s personal devices to 

conduct motor vehicle dealer activities, 

including the sale, financing, or leasing 

of vehicles, as with any business, 

dealers should ensure that their 

employees are communicating with 

consumers through appropriate 

channels that can be monitored and 

controlled by the dealership. 

Some commenters, including an 

industry association and a dealership 

organization, also raised concerns about 

how to determine what would 

constitute ‘‘written consumer 

complaints’’ under proposed 

§ 463.6(a)(5). For purposes of the Rule, 

the Commission refers commenters to 

the plain meaning of the terms used in 

the phrase, which terms are commonly 

used and understood.430

Two industry association commenters 

argued that the proposed requirement to 

retain written communications would 

be particularly burdensome for 

recreational vehicle dealers, contending 

that that this was particularly so given 

that many RV dealers are small 

businesses. In response, the 

Commission notes that, as explained in 

the paragraph-by-paragraph analysis of 

§ 463.2(e) and (f) in SBP III.B.2(e) and 

(f), it has determined not to finalize the 

Rule with respect to dealers 

predominantly engaged in the sale, 

leasing, or servicing of RVs, but it will 

continue to monitor the marketplace to 

determine whether modifications or 

revisions may be warranted in the 

future. 

Finally, one industry association 

commenter argued that the proposed 

recordkeeping requirements and costs 

were unwarranted given that the 

Commission has brought an average of 

fewer than four enforcement actions a 

year against motor vehicle dealers in the 

past decade. In response, the 

Commission notes that its experience 

indicates that the number of 

enforcement actions is not remotely 

reflective of the total violations of law 

in the auto marketplace. To uncover 

misconduct and bring actions, law 

enforcement agencies and officials often 

rely on complaints from affected parties. 

As previously discussed, however, 

consumer complaints typically 

represent just the ‘‘tip of the iceberg’’ in 

terms of actual violations, and the vast 

majority of consumers who are 

subjected to unlawful practices in this 

area may not realize they are being 

victimized.431 Further, the Commission 

has limited law enforcement resources 

and jurisdiction over a broad range of 

commerce.432 The number of actions it 

brings relating to motor vehicle 

dealers—as with actions in any area—is 

necessarily limited by these resource 

constraints, even when there are 

ongoing, chronic problems that cause 

substantial consumer harm. Despite 

these constraints, the Commission and 

its law enforcement partners have taken 

significant action aimed at addressing 

unfair and deceptive practices in the 

motor vehicle marketplace, as explained 

in SBP II.C. Given that problems with 

bait-and-switch advertising, add-ons, 

and other aspects of vehicle-buying and 

-leasing have continued to be a source 

of consumer harm despite this action, 

additional measures are warranted. And 

the Commission has taken steps to 

minimize burden, including by 

declining to finalize the add-on list 

disclosure requirements in proposed 

§ 463.4(b), as well as the itemized 

disclosures required in proposed 

§ 463.5(b) and their corresponding 

proposed recordkeeping requirements. 

Moreover, the recordkeeping provisions 

permit dealers to retain records in any 

legible form, providing a flexible 

standard that permits the use of 

ordinary and standard forms of data and 

document retention. 

The Commission adopts in the Final 

Rule recordkeeping requirements largely 

as they were set forth in the proposed 

rule, with two substantive 

modifications. After careful 

consideration, the Commission is 

removing the requirements to retain 

copies of add-on lists required by 

proposed § 463.6(a)(2) and records 

showing compliance with the cash price 

without optional add-ons disclosures 

and declinations required by proposed 

§ 463.6(a)(4). These changes will reduce 

record creation and retention burdens 

for dealers. As previously described, the 

Final Rule also contains one 

typographical modification of adding a 

serial comma and conforming edits for 

consistency with the defined terms in 

§ 463.2(e) and (f). 

The Commission adopts these 

recordkeeping requirements to promote 

effective and efficient enforcement of 

the Rule, thereby deterring and 

preventing deception and unfairness. As 

discussed throughout this SBP, the 

rulemaking record, including the 


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433Some enforcement actions have specifically 

alleged that a defendant failed to maintain 

documents required under a prior order with the 

FTC. Complaint ¶¶ 42–45, Fed. Trade Comm’n v. 

Norm Reeves, Inc., No. 8:17–cv–01942 (C.D. Cal. 

Nov. 3, 2017) (alleging dealer failed to keep records 

of previous advertisements needed to demonstrate 

compliance with prior order); Complaint ¶¶ 32–35, 

Fed. Trade Comm’n v. New World Auto Imports, 

Inc., No. 3:16–cv–22401 at (N.D. Tex. Aug. 18, 

2016) (same). 

434See, e.g., 16 CFR 310.5 (Telemarketing Sales 

Rule); 16 CFR 437.7 (Business Opportunity Rule); 

16 CFR 453.6 (Funeral Industry Practices Rule); 16 

CFR 301.41 (Fur Products Labeling Rule). 

435See MARS Rule (Regulation O), 12 CFR 

1015.8, previously published by the Commission at 

16 CFR 322.1. 

436See, e.g., Wis. Admin. Code Trans. 139.09 

(similar waiver prohibition clause in Wisconsin’s 

Motor Vehicle Trade Practices rule). 

437See MARS Rule, 16 CFR 322.8 (Commission 

Rule), 12 CFR 1015.11 (CFPB Rule); Telemarketing 

Sales Rule, 16 CFR 310.9. 

438Comment of 18 State Att’ys Gen., Doc. No. 

FTC–2022–0046–8062 at 11. 

439See City of Columbus v. Ours Garage & 

Wrecker Serv., Inc., 536 U.S. 424, 433 (2002) (‘‘The 

principle is well settled that local governmental 

units are created as convenient agencies for 

exercising such of the governmental powers of the 

State as may be entrusted to them in its absolute 

discretion.’’) (quoting Wis. Pub. Intervenor v. 

Mortier, 501 U.S. 597, 607–08 (1991)). 

Commission’s law enforcement 

experience, indicates that there are 

chronic problems confronting 

consumers in the motor vehicle sales, 

financing, and leasing process, which 

include advertising misrepresentations 

and unlawful practices related to addons and hidden charges.433 The 

recordkeeping requirements in the Final 

Rule will assist the Commission in 

investigating and prosecuting law 

violations and help the Commission 

identify injured consumers for paying 

consumer redress. The recordkeeping 

requirements are flexible, allowing 

dealers to retain materials in any legible 

form, and are limited to a period of 

twenty-four months from the date the 

record is created. The recordkeeping 

requirements are consistent with, and 

similar to, the recordkeeping 

requirements in other Commission 

rules, as tailored to individual 

industries and markets.434

G. § 463.7: Waiver Not Permitted 

Proposed § 463.7 prohibited waiver of 

the requirements of the Final Rule by 

providing that it constituted a violation 

of the Rule ‘‘for any person to obtain, or 

attempt to obtain, a waiver from any 

consumer of any protection provided by 

or any right of the consumer under’’ the 

Rule. Comments that addressed this 

proposed provision generally either 

supported it or expressed no opinion on 

it. Comments in support noted that the 

provision would help provide 

consistency in the protection it would 

provide to consumers and emphasized 

that it would prohibit unscrupulous 

dealers from causing consumers to sign 

away their rights. This proposed 

provision was modeled on a similar 

provision in the Mortgage Assistance 

Relief Services (‘‘MARS’’) Rule, which 

was originally promulgated by the 

Commission and subsequently 

republished by the CFPB.435 Moreover, 

at least one State has a similar waiver 

provision in its rule covering motor 

vehicle dealer practices.436 The 

Commission concludes that this 

provision is necessary to prevent 

circumvention of the Rule, and, after 

review of the comments, adopts this 

prohibition as it was originally 

proposed. 

H. § 463.8: Severability 

Proposed § 463.8 provided that the 

provisions of the Final Rule ‘‘are 

separate and severable from one 

another. If any provision is stayed or 

determined to be invalid, it is the 

Commission’s intention that the 

remaining provisions will continue in 

effect.’’ This proposed provision was 

modeled on similar provisions in other 

rules, including the Commission’s 

Telemarketing Sales Rule and the MARS 

Rule.437 A number of commenters, 

including dealership associations, 

raised general concerns that the 

proposed provisions may be too 

integrated with each other for 

severability to be possible. Such 

commenters, however, did not provide 

examples of any such instances wherein 

they believed certain provisions could 

not remain in effect if other provisions 

were stayed or determined to be invalid. 

Upon consideration of the comments, 

the Commission concludes that 

severability is possible in the event any 

provision is stayed or determined to be 

invalid. The Rule the Commission is 

finalizing includes prohibitions against 

misrepresentations regarding material 

information (§ 463.3), required 

disclosures (§ 463.4), and prohibitions 

against charging for add-ons that 

provide no benefit or any item without 

express, informed consent (§ 463.5)— 

each of which dealers are capable of 

abiding by independently, as well as by 

the provisions that independently 

support their operation, including 

Authority (§ 463.1), Definitions 

(§ 463.2), Recordkeeping (§ 463.6), 

Waiver not permitted (§ 463.7), and 

Relation to State laws (§ 463.9). Thus, 

the Commission has determined to 

adopt this provision in the Final Rule as 

it was originally proposed. 

I. § 463.9: Relation to State Laws 

Proposed § 463.9 provided that the 

Rule does not supersede, alter, or affect 

‘‘any other State statute, regulation, 

order, or interpretation relating to Motor 

Vehicle Dealer requirements, except to 

the extent that such statute, regulation, 

order, or interpretation is inconsistent 

with’’ the Rule, ‘‘and then only to the 

extent of the inconsistency.’’ Proposed 

§ 463.9 further provided that, for 

purposes of this provision, a State 

statute, regulation, order, or 

interpretation is not ‘‘inconsistent’’ if 

the protection such statute, regulation, 

order, or interpretation affords any 

consumer ‘‘is greater than the protection 

provided under’’ the Rule. After 

carefully considering the comments, the 

Commission adopts § 463.9 largely as 

proposed in the Final Rule. 

Numerous State regulator commenters 

contended that the proposed rule would 

create a uniform baseline of protection 

that would complement State standards. 

A comment from a group of eighteen 

State attorneys general contended that 

many of the Proposed rule’s 

requirements were similar to, or the 

same as, requirements that currently 

exist under State laws or regulations, 

and highlighted the benefit to law 

enforcement from establishing a 

consistent Federal baseline while 

providing States with flexibility to 

impose heightened consumer 

protections.438

One municipal licensing entity 

commenter that expressed general 

support of the Commission’s proposed 

rule also posited that the Commission 

should broaden proposed § 463.9 to 

expressly include municipalities. With 

respect to the applicability of the 

provision to municipalities, the 

Commission notes that State political 

subdivisions exercise delegated power 

of their State, and as such, § 463.9 

applies to municipal standards as 

well.439

Other commenters, including 

dealership associations, referred 

generally to potential conflicts between 

the Commission’s proposed rule and 

State laws, but such commenters 

typically did not point to any specific 

purported conflicts with State law. To 

the extent some such commenters 

argued that certain proposed provisions 

would conflict with State laws, such 

arguments are addressed in the SBP’s 

corresponding paragraph-by-paragraph 

analysis of the relevant Rule provision. 

Generally, the Commission is not aware 

of State laws that allow dealers to make 

misrepresentations regarding material 

information; prohibit the disclosure of 


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440See, e.g., Pirouzian v. SLM Corp., 396 F. Supp. 

2d 1124, 1131 (S.D. Cal. 2005) (reasoning that the 

more inclusive definition of ‘‘debt collector’’ under 

California law is not ‘‘inconsistent’’ with the Fair 

Debt Collection Practices Act because by ‘‘enlarging 

the pool of entities who can be sued’’ the State law 

offered greater protection). 

441See, e.g., 10 U.S.C. 987(d)(1) (Military Lending 

Act); 15 U.S.C. 1692n (Fair Debt Collection 

Practices Act); 12 CFR 1006.104 (Regulation F); 15 

U.S.C. 1693q (Electronic Funds Transfer Act); see 

also 21 U.S.C. 387p(a)(1) (Family Smoking 

Prevention and Tobacco Control Act). 

442See 5 U.S.C. 553(d) (requiring publication of 

a substantive APA rule ‘‘not less than 30 days 

before its effective date’’ except ‘‘as otherwise 

provided by the agency for good cause found and 

published with the rule’’). Significant rules defined 

by Executive Order 12866 and major rules defined 

by the Small Business Regulatory Enforcement 

Fairness Act are required to have a 60-day delayed 

effective date. See E.O. 12866, 58 FR 51735 (Oct. 

4, 1993); 5 U.S.C. 801(a)(3)). 

accurate information regarding a 

vehicle’s offering price, optional vehicle 

add-ons, or total payment information; 

or permit dealers to charge consumers 

for add-ons that provide no benefit to 

the consumer or to charge for items 

without consumers’ express, informed 

consent. To the extent there truly are 

conflicts, as discussed in the following 

paragraphs, § 463.9 establishes the 

framework for addressing any such 

inconsistencies. 

Commenters including dealership 

associations also argued that existing 

State standards are sufficient and 

identified State requirements that the 

commenters argued would be redundant 

with, or superior to, one or more 

provisions in the Commission’s 

proposed rule. To the extent the Rule 

prohibits conduct that is already 

prohibited by State laws, the 

Commission has not seen evidence that 

State and Federal standards prohibiting 

the same misconduct has harmed 

consumers or competition. Moreover, 

such overlap is indicative of dealers’ 

ability to comply with the relevant 

provisions in the Rule. To the extent 

State laws have additional requirements 

that provide greater protections or are 

not otherwise inconsistent with part 

463, dealers must continue to follow 

those laws. 

Several dealership association 

commenters expressed concern 

regarding how to determine whether a 

State statute, regulation, order, or 

interpretation affords ‘‘greater 

protection’’ than a provision in the 

Commission’s proposed rule. One such 

commenter, for example, raised 

concerns that proposed § 463.5(a) may 

conflict with a pending California bill 

that would prohibit the sale of GAP 

when a vehicle has less than a 70% 

loan-to-value ratio. An industry 

association commenter claimed that the 

Commission’s proposed definitions of 

‘‘Dealer or Motor Vehicle Dealer’’ would 

conflict with analogous State 

definitions. In response, the 

Commission emphasizes that § 463.9 

would be triggered only if there were an 

actual inconsistency between State law 

and the Final Rule, and in the event of 

an inconsistency, the Rule only affects 

such State law to the extent of the 

inconsistency. The commenter 

examples did not present any such 

inconsistencies because it is possible to 

comply with both the cited State law 

examples and with the Final Rule. For 

instance, a dealer operating in a State 

that prohibits the sale of a GAP 

agreement when a vehicle transaction 

involves a loan-to-value ratio below 

70% would need to abide by the ratio 

set forth by State law and also by the 

Rule’s prohibition against charging for 

the product if the consumer would not 

benefit from it. Similarly, 

notwithstanding a commenter’s claims 

that the proposed rule’s definition of 

‘‘Dealer or Motor Vehicle Dealer’’ would 

conflict with analogous State standards, 

the commenter did not identify any 

actual conflicts; nevertheless, to the 

extent State and Federal standards cover 

independent areas or actors, each actor 

must comply with the standards— 

whether State, Federal, or both—under 

which the actor is covered.440 Further 

discussion of how State laws interact 

with specific sections of the Rule are 

explained in the corresponding sectionby-section analysis for the relevant 

sections. 

Some such commenters also 

questioned whether more coordination 

with States and Federal agencies was 

needed, without explaining what 

coordination was needed. In any event, 

the Commission coordinates regularly 

with States and Federal counterparts. 

Many commenters’ concerns focused 

on the written disclosures proposed in 

§ 463.5(b), which the Commission has 

determined not to include in this Final 

Rule. For instance, a substantial number 

of commenters, including industry 

associations, argued that proposed 

§ 463.5(b) would have created different 

Federal and State requirements for 

written disclosures that would result in 

duplicative paperwork. A dealership 

association specifically argued that 

proposed § 463.5(b) may have conflicted 

with a State pre-contract disclosure 

requirement pertaining to six categories 

of add-ons because it would have 

required an additional disclosure about 

a broader category of add-ons. An 

industry association similarly pointed to 

this State’s pre-contract disclosure 

requirement as a reason that additional 

disclosures under this Rule, including 

those required by proposed § 463.5(b), 

could result in consumer confusion. At 

least four commenters, including 

industry associations and a dealership 

organization, argued that the proposed 

rule’s requirement under § 463.5(b) to 

create new documentation may conflict 

with the ‘‘single document’’ 

requirements, in effect in many States, 

which mandate that the entire motor 

vehicle sale, financing, or lease 

agreement—including any add-on 

products or services—be within one 

document. As discussed in the 

paragraph-by-paragraph analysis of 

§ 463.5 in SBP III.E.2, the Commission 

has determined not to finalize the 

written disclosures requirement under 

this provision. 

After carefully considering the 

comments regarding proposed § 463.9, 

the Commission is finalizing this 

section largely as proposed, with one 

minor modification: the Commission is 

adding ‘‘Covered’’ to the term ‘‘Motor 

Vehicle Dealer’’ in § 463.9(a) to conform 

with the revised definition in § 463.2(f). 

Section 463.9 provides a uniform floor 

of protection with the Commission’s 

Final Rule, while also permitting States 

to enact stronger protections, using a 

standard that has been applied in other 

laws and regulations for several 

decades.441 This provision is necessary 

to address unfair and deceptive 

practices and to enable the Commission 

to enforce the Rule. 

IV. Effective Date 

The Final Rule becomes effective on 

July 30, 2024. One industry association 

commenter objected that the NPRM did 

not include an effective date or inquire 

into the timing for feasibly 

implementing the Rule. Another such 

commenter requested at least 18 months 

for stakeholders to prepare for Rule 

compliance, but did not explain why it 

would take 18 months to refrain from 

conduct that is already illegal, such as 

making misrepresentations. Rules are 

generally required to be published 30 to 

60 days before their effective date, 

though in some circumstances, agencies 

may cite good cause for the rule to 

become effective sooner than 30 days 

from publication.442 Given the 

significant harm to consumers and lawabiding dealers from deceptive or unfair 

acts or practices; and the fact that, for 

dealers already complying with the law, 

compliance with the Rule the 

Commission is finalizing should not be 

onerous; the NPRM did not propose or 

contemplate any additional delay. 

Nevertheless, after a review of 

comments, the Commission is providing 

dealers until July 30, 2024 to make 


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443OMB assigned the rulemaking control number 

3084–0172 for PRA review purposes. 

444 44 U.S.C. 3502(3); 5 CFR 1320.3(c). 

445One commenter suggested the FTC did not 

comply with several provisions of the PRA, 

specifically those contained in 5 CFR 

1320.5(a)(1)(iv), 1320.8(d)(1), 1320.11(a), 

1320.11(b), and 1320.11(d). The commenter does 

not explain the basis for the purported deficiencies. 

These provisions generally relate to the submission 

of a collection of information to OMB, and 

solicitation and consideration of public comments. 

The FTC has complied with these provisions. The 

FTC submitted an Information Collection Request to 

Office of Management and Budget on July 13, 2022, 

concurrently with publication of the NPRM, in 

accordance with 5 CFR 1320.11(b). See Motor 

Vehicle Dealers Trade Regulation Rule, ICR 

202202–3084–001, OMB 3084–0172, https://

omb.report/icr/202202-3084-001. Because the FTC 

complied with this requirement, the collection of 

information proposed in the NPRM is not, as the 

commenter contends, subject to disapproval under 

5 CFR 1320.11(d). 

The Commission also did not violate 5 CFR 

1320.5(a)(1)(iv) and 1320.11(a), providing for 

comments to be submitted to OMB, as the 

commenter contends. Those provisions are limited 

by 5 CFR 1320.8(d)(3), which provides that the 

agency need not direct comments to OMB ‘‘if the 

agency provides notice and comment through the 

notice of proposed rulemaking . . . for the same 

purposes as are listed under’’ 5 CFR 1320.8(d)(1). 

The Commission solicited comments in the NPRM 

on the subjects enumerated in 5 CFR 1320.8(d)(1), 

see NPRM at 42028–31, 42035–43, and it was not 

necessary for the Commission to also direct those 

same comments to OMB. The Commission thus did 

not violate 5 CFR 1320.5(a)(iv) or 1320.11(a). 

Further, contrary to the commenter’s assertion, 

the Commission demonstrated throughout the 

NPRM that the information collection-related 

requirements it embodies are necessary, offer utility 

and public benefit, and minimize burdens. See, e.g., 

NPRM at 42027, 42043. Moreover, the Commission 

requested comments on the necessity, utility, 

benefits, and burdens of the proposed rule, see 

NPRM at 42028–31, 42035–43, and has further 

taken into consideration and addressed comments 

in this SBP. 

446NPRM at 42031. 

447NPRM at 42031 n.154, 42036. 

448See also Used Car Rule, 81 FR at 81668 (noting 

that the term ‘‘servicing’’ used in this same context 

‘‘captures activities undertaken by essentially all 

used car dealers,’’ including by preparing vehicles 

for sale by addressing any obvious mechanical 

problems and by undertaking the general industry 

practice of appearance reconditioning). 

449NAICS is the standard used by Federal 

statistical agencies in classifying business 

establishments for the purpose of collecting, 

analyzing, and publishing statistical data related to 

the U.S. business economy. North American 

Industry Classification System, U.S. Census Bureau, 

https://www.census.gov/naics/. 

450U.S. Census Bureau, ‘‘All Sectors: County 

Business Patterns, including ZIP Code Business 

Patterns, by Legal Form of Organization and 

Employment Size Class for the U.S., States, and 

Selected Geographies: 2019,’’ https://

data.census.gov/cedsci/table?q=CBP2019.

CB1900CBP&n=44111%3A44112&tid=

CBP2019.CB1900CBP&hidePreview=true&nkd=

EMPSZES∼001,LFO∼001 (listing 21,427 

establishments for ‘‘new car dealers,’’ NAICS code 

44111, and 25,098 establishments for ‘‘used car 

dealers,’’ NAICS code 44112). See NPRM at 42031. 

451U.S. Census Bureau, ‘‘All Sectors: County 

Business Patterns, including ZIP Code Business 

Patterns, by Legal Form of Organization and 

Employment Size Class for the U.S., States, and 

Selected Geographies: 2021,’’ https://

data.census.gov/table?q=CB2100CBP&n=

44111:44112&tid=CBP2021.CB2100CBP&nkd=

EMPSZES∼001,LFO∼001 (listing 21,622 

establishments for ‘‘new car dealers,’’ NAICS code 

44111, and 25,649 establishments for ‘‘used car 

dealers,’’ NAICS code 44112). 

changes to their operations, if needed, 

in light of the Rule’s requirements. 

V. Paperwork Reduction Act 

On July 13, 2022, the Commission 

submitted the NPRM and an 

accompanying Supporting Statement to 

the Office of Management and Budget 

(‘‘OMB’’) for review under the 

Paperwork Reduction Act (‘‘PRA’’), 44 

U.S.C. 3501–3521. On July 29, 2022, 

OMB directed the Commission to 

resubmit its request when the proposed 

rule was finalized.443

The Commission is now submitting 

the Final Rule and a Supplemental 

Supporting Statement to OMB. The 

disclosure and recordkeeping 

requirements of the Rule constitute 

‘‘collection[s] of information’’ for 

purposes of the PRA.444 The associated 

burden analysis follows.445

In the NPRM, the Commission 

provided estimates and solicited 

comments regarding the proposed rule, 

including regarding (1) the proposed 

add-on list disclosure requirement; (2) 

the proposed cash price without 

optional add-ons disclosure 

requirement; (3) other proposed 

provisions prohibiting certain 

misrepresentations and requiring certain 

disclosures; (4) the proposed 

recordkeeping provisions; and (5) 

estimated capital and other non-labor 

costs. As previously discussed, after 

carefully reviewing the comments, the 

Commission has made certain changes 

to the relevant provisions in the Final 

Rule. Specifically, the Commission has 

determined not to finalize requirements, 

pursuant to proposed § 463.4(b), that 

dealers disclose an add-on list or, 

pursuant to proposed § 463.5(b), that 

dealers refrain from charging for 

optional add-ons unless enumerated 

requirements relating to the vehicle’s 

cash price without optional add-ons are 

met. 

In the NPRM, the Commission 

estimated that the disclosure and 

recordkeeping requirements would 

impact approximately 46,525 franchise, 

new motor vehicle and independent/ 

used motor vehicle dealers in the 

U.S.446 In the NPRM, the Commission 

explained that this figure was exclusive 

to automobile dealers, and invited 

comments regarding market information 

for dealers of other types of motor 

vehicles, such as boats, RVs, and 

motorcycles.447 In response, one 

industry association commenter noted 

the absence of such other motor vehicle 

dealers from the Commission’s estimate. 

Another commenter also noted the 

absence of such dealers in the estimate 

and argued that the Commission’s 

estimate also erroneously included 

independent used motor dealers which 

the commenter contended do not 

perform any servicing work, but stated 

that the Commission’s estimate was 

fairly accurate numerically. As 

discussed in the paragraph-byparagraph analysis of § 463.2(e) in SBP 

III.B.2(e), the Commission has 

determined to expressly exclude 

‘‘Recreational boats and marine 

equipment,’’ ‘‘Motorcycles, scooters, 

and electric bicycles,’’ ‘‘Motor homes, 

recreational vehicle trailers, and slide-in 

campers,’’ and ‘‘Golf carts’’ from the 

Final Rule’s definition of ‘‘Covered 

Motor Vehicle.’’ Further, as examined in 

the paragraph-by-paragraph analysis of 

§ 463.2(f) in SBP III.B.2(f), the plain 

meaning of the term ‘‘servicing’’ covers 

activities that are undertaken by 

independent used car dealers.448 Thus, 

the Commission bases its estimate of the 

entities covered by the Final Rule on the 

same North American Industry 

Classification System (‘‘NAICS’’) 449

categories—‘‘new car dealers’’ and 

‘‘used car dealers’’—as it did in the 

NPRM.450 As with other figures in this 

section, the NAICS data assembled by 

the U.S. Census Bureau have been 

revised since the publication of the 

Commission’s NPRM with more recent 

data. Based on these revisions, the 

Commission now estimates that the 

Final Rule’s disclosure and 

recordkeeping requirements will impact 

approximately 47,271 franchise, new 

motor vehicle and independent/used 

motor vehicle dealers in the United 

States.451

The estimated overall annual hours 

burden for the Final Rule’s collections 

of information is 1,595,085 hours. The 

estimated overall annual labor cost for 

the Final Rule’s collections of 

information is $51,904,537. The 

estimated overall annual capital and 

other non-labor cost for the Final Rule’s 

collections of information is 

$14,181,300. 

A. Add-On List Disclosures 

Section 463.4(b) of the proposed rule 

required motor vehicle dealers that 

charge for optional add-on products or 

services to disclose clearly and 

conspicuously in advertisements and on 

any website, online service, or mobile 

application through which they market 

motor vehicles, and at any dealership, 

an itemized add-on list of such products 


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452NPRM at 42032–33, 40235, 42040. 

453NPRM at 42033, 42039. 

454The Commission produced and considered 

alternative cost estimate scenarios for the Rule 

provisions in its preliminary regulatory analysis, 

see NPRM at 42036–44, and its final regulatory 

analysis in section VII. The Commission also 

invited comments on the accuracy of its PRA 

burden estimates, including the validity of the 

methodology and assumptions used, see NPRM at 

42035. The Commission provides a single estimate 

per Rule provision for this separate Paperwork 

Reduction Act burden analysis in conformity with 

the PRA. See 44 U.S.C. 3506(c)(1)(A)(iv) (providing, 

for each collection of information, including those 

arising from rules published as final rules in the 

Federal Register, that agencies shall conduct a 

review that includes ‘‘a specific, objectively 

supported estimate of burden’’). 

455Some commenters suggested that providing an 

Offering Price may be difficult due to pricing 

changes over time. As explained in SBP III.D.2(a), 

limited-time offers should be clearly disclosed as 

such. Advertising prices without disclosing 

material limitations that would mislead consumers 

is a deceptive or unfair practice. 

456As stated in SBP III.B.2(k) and SBP III.D.2(a), 

the Commission is finalizing this Offering Price 

definition at § 463.2(k) largely as proposed, with a 

modification to clarify that dealers may, but need 

not, exclude required government charges from a 

vehicle’s offering price. In addition, this definition 

in the Final Rule substitutes ‘‘Vehicle’’ for ‘‘motor 

vehicle’’ to clarify that the term is consistent with 

the revised definition of ‘‘‘Covered Motor Vehicle’ 

or ‘Vehicle’ ’’ at § 463.2(e). The Commission also 

added language to the end of § 463.4(a) clarifying 

that the requirements in § 463.4(a) ‘‘also are 

prescribed for the purpose of preventing the unfair 

or deceptive acts or practices defined in this part, 

including those in §§ 463.3(a) and (b) and 

§ 463.5(c).’’ 

457See NPRM at 42033, 42039–40. 

or services and their prices. In the 

NPRM, the Commission estimated costs 

for the add-on list disclosure and 

solicited comments on its burden 

analysis.452 One industry association 

made several arguments, including that 

the Commission underestimated the 

time and resources required because an 

add-on list can be lengthy, vary by 

vehicle and over time, and require 

working with several third parties. This 

commenter also argued that periodic 

revision of such lists would take more 

than the estimated one hour of clerical 

time per dealer, per year. The 

commenter, however, did not offer any 

specific estimates for such periodic 

revision activities. 

As explained in the section-by-section 

analysis of § 463.4 in SBP III.D.2, after 

careful consideration, the Commission 

has determined not to finalize its 

proposed add-on list provision at 

§ 463.4(b). 

B. Disclosures Relating to Cash Price 

Without Optional Add-Ons 

Section 463.5(b) of the proposed rule 

required motor vehicle dealers that 

charge for optional add-on products or 

services to provide certain itemized 

disclosures regarding pricing and cost 

information without such add-ons. In 

response to the Commission’s estimates 

with respect to this proposed provision, 

one industry association argued that the 

Commission did not provide adequate 

explanation of the assumptions it used 

to arrive at its cost estimates for this 

proposed provision, and contended that 

the Commission underestimated the 

costs associated with developing, 

printing, and presenting the proposed 

disclosures. This commenter also 

contended that the proposed 

requirement would have required 

significant training costs; that multiple 

forms would have been required for 

each motor vehicle transaction; and that 

aspects of the required disclosures 

would be duplicative of information 

already provided by dealerships in the 

ordinary course of business. The 

commenter estimated that developing a 

disclosure form for this proposed 

provision would cost dealers at least 

$750 and suggested that other attendant 

costs would be in the hundreds of 

millions or billions of dollars, without 

explaining how it arrived at such 

estimated figures. 

As explained in the section-by-section 

analysis of § 463.5 in SBP III.E, after 

careful consideration, the Commission 

has determined not to include in this 

Final Rule the itemized disclosure 

provisions at proposed § 463.5(b). The 

Commission notes that imposing 

unauthorized charges—including 

charges buried in lengthy contracts or 

included in contracts that consumers 

are rushed through—is a violation of 

both the Final Rule’s § 463.5(c) and of 

the FTC Act. The Commission will 

continue to monitor the market to 

determine whether additional steps are 

warranted to combat unauthorized 

charges for add-ons or other items in the 

motor vehicle marketplace. 

C. Prohibited Misrepresentations and 

Required Disclosures 

Section 463.3 of the Final Rule 

prohibits dealers from making any 

misrepresentation regarding material 

information about the categories 

enumerated in the section. 

The provisions in this section have 

been adopted largely without 

modification from the NPRM, wherein 

the Commission estimated that any 

additional costs associated with the 

proposed misrepresentation 

prohibitions would be de minimis.453

One industry association commenter 

argued that a bar on misrepresentations 

in the Final Rule would require 

increased training and compliance costs 

and result in longer transaction times 

and costs related to working with 

vehicle manufacturers about online 

advertisements. This section, however, 

does not require any additional 

disclosures or information collection. 

Thus, while dealers might elect to 

enhance their training and 

compliance,454 refraining from making 

misrepresentations does not require 

additional training or compliance costs 

or transaction time. The Commission 

therefore affirms its prior estimate that 

any additional costs associated with the 

prohibitions in § 463.3 against making 

misrepresentations would be de 

minimis. 

Section 463.4(a) of the Final Rule 

requires dealers to clearly and 

conspicuously disclose a vehicle’s 

offering price in advertisements and 

other communications that reference a 

specific vehicle, or any monetary 

amount or financing term for any 

vehicle. ‘‘Offering Price’’ is defined in 

§ 463.2(k) of the Rule as ‘‘the full cash 

price for which a Dealer will sell or 

finance the Vehicle to any consumer, 

provided that the Dealer may exclude 

only required Government Charges.’’ 

The information required by § 463.4(a) 

is necessary to address unfair or 

deceptive conduct associated with the 

failure to provide such price 

information and unfairly charging 

unexpected prices or for hidden items 

that can add hundreds or thousands of 

dollars to a vehicle sale.455

This provision is being adopted 

largely as proposed.456 In response to 

the NPRM, one industry association 

commenter claimed there would be an 

average of three offering price 

disclosures per transaction, since, 

according to the commenter, consumers, 

on average discuss three specific motor 

vehicles per transaction. This 

commenter also contended that the 

number of required offering price 

disclosures would obligate dealers to 

incur additional training costs. As the 

Commission explained in its NPRM, 

vehicle pricing activities and 

representations are usually and 

customarily performed by dealers in the 

course of their regular business 

activities. While this provision may 

increase the importance of those 

activities, or alter when in the course of 

business they are undertaken, the 

Commission estimates that any 

additional attendant costs are de 

minimis.457

Section 463.4(d) of the Final Rule 

require dealers, when making any 

representation about a monthly payment 

for any vehicle, to disclose the total 

amount the consumer will pay to 

purchase or lease the vehicle at that 

monthly payment after making all 


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458These provisions in the Final Rule capitalize 

the defined term ‘‘Vehicle’’ to conform with the 

revised definition of ‘‘ ‘Covered Motor Vehicle’ or 

‘Vehicle’ ’’ at § 463.2(e). The Commission also 

substituted a period for a semi-colon and the word 

‘‘and’’ at the end of § 463.4(d)(1), and added 

language to the end of § 463.4(d) and (e) clarifying 

that the requirements in these paragraphs ‘‘also are 

prescribed for the purpose of preventing the unfair 

or deceptive acts or practices defined in this part, 

including those in §§ 463.3(a) and § 463.5(c).’’ 

459The estimates throughout this section have 

been updated with more recent data since the 

publication of the NPRM. Labor rates are based on 

new data from the Bureau of Labor Statistics. See 

U.S. Bureau of Labor Statistics, ‘‘May 2022 National 

Industry-Specific Occupational Employment and 

Wage Estimates NAICS 441100—Automobile 

Dealers’’ (Apr. 25, 2023), https://www.bls.gov/oes/ 

current/naics4_441100.htm. The number of 

dealerships has been updated to reflect new data 

from Census County Business Patterns. See U.S. 

Census Bureau, ‘‘All Sectors: County Business 

Patterns, including ZIP Code Business Patterns, by 

Legal Form of Organization and Employment Size 

Class for the U.S., States, and Selected Geographies: 

2021,’’ https://data.census.gov/table?q=

CB2100CBP&n=44111:44112&tid=CBP2021.

CB2100CBP&nkd=EMPSZES∼001,LFO∼001. 

460This provision in the Final Rule capitalizes 

the defined term ‘‘Vehicle’’ to conform with the 

revised definition of ‘‘ ‘Covered Motor Vehicle’ or 

‘Vehicle’ ’’ at § 463.2(e). The Commission also 

added language to the end of § 463.4(c) clarifying 

that the requirements in this paragraph ‘‘also are 

prescribed for the purpose of preventing the unfair 

or deceptive acts or practices defined in this part, 

including those in §§ 463.3(a) and (b) and 

§ 463.5(c).’’ 

461As with § 463.3, § 463.5(a) does not require 

any additional disclosures or information 

collection. Thus, while dealers might elect to 

enhance their training and compliance policies, or 

to take steps to document compliance with 

§ 463.5(a), any such additional measures are not 

required by this provision. 

462See SBP III.E.2(c). 

463 In its NPRM, the Commission noted that it 

anticipated this section would require dealers to 

provide readily available information to consumers 

in direct communications with customers, and that 

dealers complying with existing law have policies 

in place to prevent charges without consent, 

thereby estimating minimal additional resulting 

costs. See NRPM at 42033, 42036–44. The 

Commission did not receive comments discussing 

attendant burdens in sufficient detail for revised 

cost estimates, and thus affirms its prior estimate 

regarding additional costs associated with 

§ 463.5(c). 

464The Final Rule also contains one 

typographical modification to § 463.6—adding a 

serial comma—and minor textual changes to ensure 

consistency with the defined terms at § 463.2(e) and 

(f). 

465NPRM at 42033–34, 42043. 

payments as scheduled, as well as the 

amount of consideration to be provided 

by the consumer if the total amount 

disclosed assumes the consumer will 

provide consideration. Section 463.4(e) 

of the Final Rule requires dealers, when 

making any comparison between 

payment options that includes 

discussion of a lower monthly payment 

to disclose, if true, that a lower monthly 

payment will increase the total amount 

the consumer will pay to purchase or 

lease the vehicle. 

These provisions have been adopted 

largely as proposed.458 In response to 

the Commission’s estimates with respect 

to these proposed provisions, one 

commenter raised concerns that these 

disclosures would intrude on existing 

disclosures, and that any associated 

paperwork burden would be confusing, 

duplicative, and unnecessary. The 

commenter also argued that these 

disclosures would add time to the 

transaction process and require 

additional staff training. No commenters 

provided alternative estimates of the 

costs associated with this provision. 

Failing to disclose information about 

the total of payments for a vehicle when 

representing monthly payment 

information is deceptive or unfair, as set 

forth in SBP III.D.2(d). Dealers already 

generate the required information 

during the normal course of business, 

and disclosing this total of payments 

information provides consumers with 

fundamental information that is readily 

available to the dealer when making 

representations regarding monthly 

payments, at which time such 

disclosures are required. Nevertheless, 

there may be upfront labor costs 

associated with developing procedures 

to provide these disclosures consistently 

at the appropriate point in the 

transaction and with training 

employees. The Commission estimates 

such upfront costs as follows: 8 

compliance manager hours per dealer 

on implementing a template disclosure 

script that contains the required 

information and on ensuring sales staff 

consistently deliver the disclosure at an 

appropriate time during the transaction, 

for an upfront hours burden of 378,168 

(8 hours × 47,271). Applying labor costrates of $31.21 per hour yields 

$11,802,623.28 ($31.21 × 378,168 

hours).459 After a review of comments, 

the Commission is adding ongoing 

training costs. Specifically, the 

Commission estimates annual ongoing 

costs of 1 hour of training time for sales 

and related employees per year, for an 

annual hours burden of 417,110 (1 hour 

× 417,110 sales and related employees). 

Applying labor cost-rates of $29.43 per 

hour, the total estimated ongoing labor 

cost burden is $12,275,547.30 across the 

industry (417,110 sales and related 

employees × 1 hour × $29.43). 

Further, § 463.4(c) of the Final Rule 

requires dealers that sell optional addon products or services to disclose to 

consumers that these add-ons are not 

required, and that the consumer can 

purchase or lease the vehicle without 

these add-ons. This requirement has 

been adopted largely as proposed, and 

is necessary to address deceptive and 

unfair practices regarding these 

products or services, including 

misrepresentations that these products 

are required when they are not, and 

charging consumers for such products 

without the consumers’ express, 

informed consent.460 It requires a 

simple disclosure of information that is 

known to the dealer, and the 

Commission anticipates that the 

information collection burdens 

associated with this requirement is de 

minimis.461

Similarly, § 463.5(c) of the Final Rule 

requires dealers to refrain from charging 

consumers for any item unless the 

dealer obtains the express, informed 

consent of the consumer for the 

charge.462 In response to the 

Commission’s estimates with respect to 

these proposed provisions, some 

commenters generally discussed 

burdens, as addressed in the section-bysection analysis in SBP III, that they 

contended would accompany this 

proposed provision, but none provided 

sufficient detail for cost estimates. The 

Commission notes that this provision 

addresses the unfair or deceptive 

practice of charging consumers for items 

they do not know about or to which 

they have not agreed, or in amounts 

beyond those to which the consumer 

has agreed. As dealers must currently 

have policies in place to prevent charges 

without consent in order to comply with 

current law, the Commission anticipates 

that any burdens associated with this 

provision will be de minimis.463

D. Recordkeeping 

Section 463.6 of the Final Rule 

requires dealers to create and retain, for 

a period of twenty-four months from the 

date the record is created, all records 

necessary to demonstrate compliance 

with the Rule, including with its 

disclosure requirements. This provision 

has been adopted with revisions to 

account for other changes in the Final 

Rule, as explained in SBP III.F.464 These 

recordkeeping provisions are necessary 

to promote effective and efficient 

enforcement of the Rule, thereby 

deterring dealers from engaging in 

deceptive or unfair acts or practices. 

In the NPRM, the Commission 

provided cost estimates and solicited 

comment on its recordkeeping burden 

analysis.465 The Commission 

anticipated that dealers would incur 

certain incremental costs related to: (i) 

recordkeeping systems; and (ii) 

calculations of loan-to-value ratios for 

contracts with GAP agreements. 

Several commenters, including 

industry associations, dealership 

organizations, and a dealership 


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466 In its NPRM, the Commission estimated costs 

to create and implement a loan-to-value calculation 

process. NPRM at 42034. Such costs are already 

accounted for in the Commission’s estimates for the 

time required to modify existing recordkeeping 

systems, and thus are not separately itemized here. 

467Applicable wage rates are based on data from 

the Bureau of Labor Statistics. See U.S. Bureau of 

Labor Statistics, ‘‘May 2022 National IndustrySpecific Occupational Employment and Wage 

Estimates NAICS 441100—Automobile Dealers’’ 

(Apr. 25, 2023), https://www.bls.gov/oes/current/ 

naics4_441100.htm. 

468These arguments are addressed in the sectionby-section analysis of § 463.5. See SBP III.E. 

469 In response to comments, the Commission has 

revised the number of transactions across the 

industry from the NPRM to exclude private party 

and fleet transactions. The estimated percentage of 

sales including GAP agreements is derived from 

data provided by an industry commenter. Comment 

of Nat’l Auto. Dealers Ass’n, Doc. No. FTC–2022– 

0046–8368 at 12. 

470One commenter claimed generally that the 

Commission underestimated these costs, referring 

to arguments the commenter made with respect to 

the Commission’s burden analysis of specific 

disclosure and recordkeeping provisions. The 

Commission has responded to those arguments in 

the foregoing analysis, with the exception of 

recordkeeping storage costs, which are addressed in 

the following discussion. 

471NPRM at 42034. 

association, generally contended that 

the Commission underestimated the 

burdens of compliance relating to the 

changes dealers would need to make to 

their existing recordkeeping systems. 

These commenters, however, did not 

provide the Commission with 

alternative estimates regarding such 

burdens. As explained in the section-bysection analysis of the Recordkeeping 

section, § 463.6, in SBP III.F, this 

provision gives dealers the flexibility to 

retain materials in any legible form, 

including in the same manner, format, 

and place as they may already keep 

such records in the ordinary course of 

business. The Commission nonetheless 

has determined, in response to 

comments, to revise its estimates 

regarding incremental storage expenses 

that may be associated with the 

recordkeeping requirements in the Final 

Rule, and, as provided in the capital and 

other non-labor costs discussion in the 

following paragraphs, the Commission 

is adding an estimate of incremental 

additional storage costs to its estimate. 

Further, the Commission notes that its 

initial recordkeeping cost estimates 

were based on a proposal that required 

records regarding add-on list disclosures 

and cash price without optional add-on 

disclosures—records that the Rule the 

Commission is finalizing does not 

require dealers to retain. Given that the 

Commission is not finalizing these 

additional record-related requirements, 

the estimates provided in its NPRM may 

overestimate attendant costs resulting 

from the Rule’s recordkeeping 

requirements. Notwithstanding this 

possibility, the Commission maintains 

its prior calculations of the time 

required to modify existing 

recordkeeping systems.466 The 

Commission anticipates that it will take 

covered motor vehicle dealers 

approximately 15 hours to modify their 

existing recordkeeping systems to retain 

the required records for the 24-month 

period specified in the Rule. This yields 

a general recordkeeping burden of 

709,065 hours annually (47,271 motor 

vehicle dealers × 15 hours per year). 

The Commission anticipates that 

programming, administrative, 

compliance, and clerical staff are likely 

to perform the tasks necessary to 

comply with the recordkeeping 

requirements in § 463.6 of its Rule. In 

particular, the Commission estimates 

this 15-hour per-dealer labor hours 

burden to design, implement, or update 

systems for record storage and create the 

templates necessary to accommodate 

retention of all relevant materials, as 

follows: 8 hours of time for a 

programmer, at a cost-rate of $40.24 per 

hour; 5 hours of additional clerical staff 

work, at a cost-rate of $20.16 per hour; 

1 hour of sales manager review, at a 

cost-rate of $80.19 per hour; and 1 hour 

of review by a compliance officer, at a 

cost-rate of $31.21 per hour.467

Applying these cost-rates to the 

estimated per-dealer hours burden 

described previously, the total estimated 

initial labor cost burden is $534.12 per 

average dealership (($40.24 per hour × 

8 hours) + ($20.16 per hour × 5 hours) 

+ ($80.19 per hour × 1 hour) + ($31.21 

per hour × 1 hour)), totaling 

$25,248,386.52 across the industry 

($534.12 per average dealership × 

47,271 dealerships). 

The Commission also received 

comments regarding its cost estimates 

relating to the records of loan-to-value 

ratios for transactions that include GAP 

agreement sales. One industry 

association commenter argued that this 

recordkeeping requirement would also 

require additional training, that creating 

a loan-to-value calculator template for 

GAP agreements would be difficult 

given the variation of loan-to-value 

ratios, and that this recordkeeping 

requirement would lengthen the time to 

conduct vehicle sale or financing 

transactions.468 No commenter provided 

alternative estimates of the costs 

associated with the Commission’s 

proposed recordkeeping requirements. 

As explained in the paragraph-byparagraph analysis of § 463.5 in SBP 

III.E.2, the Commission is not 

mandating a particular LTV threshold or 

method of calculation, but rather 

requiring that dealers not charge a 

consumer for GAP agreements or other 

products or services if the consumer 

would not benefit from the product or 

service. The Commission anticipates 

that, to the extent dealers do not 

currently retain any materials used to 

make such an assessment, dealers may 

incur certain additional costs. 

Specifically, the Commission 

anticipates that dealers will expend one 

minute per sales or financing 

transaction for a salesperson to perform 

the calculation contemplated by this 

requirement, at a cost rate of $28.41 per 

hour. The Commission estimates that 

covered motor vehicle dealers sell 

approximately 31,562,959 vehicles each 

year, and that approximately 17% of 

such sales include GAP agreements, for 

an estimated total of 5,444,502 covered 

vehicle sales.469 While the number of 

motor vehicles sold will vary by 

dealership, this yields an average sales 

volume of 115 sales transactions per 

average dealership per year that include 

a GAP agreement (5,444,502 covered 

vehicle sales/47,271 dealerships). This 

yields an estimated annual hours 

burden for all dealers of 90,742 hours 

(5,444,502 covered transactions × 1/60 

hours). Applying the associated labor 

rates yields an estimated annual labor 

cost for all dealers of $2,577,980.22 

(90,742 hours × $28.41 per hour). 

E. Capital and Other Non-Labor Costs 

The Commission anticipates that the 

Final Rule will impose limited capital 

and non-labor costs. The Commission 

presented estimates in the NPRM with 

respect to such costs and solicited 

comments on its burden analysis. Here, 

the Commission discusses its estimates 

for the capital and non-labor costs 

associated with the Rule’s disclosure 

and recordkeeping requirements. While 

some commenters generally discussed 

burdens that they contended would 

accompany these proposed provisions, 

none provided any alternative cost 

estimates regarding capital and other 

non-labor costs.470

1. Disclosures 

The Commission anticipates that the 

Rule’s disclosure requirements will 

impose de minimis capital and other 

non-labor costs. As the Commission 

noted in the NPRM, dealers already 

have in place existing systems for 

providing sales- and contract-related 

disclosures to buyers and lessees, as 

well as to consumers seeking 

information during the vehicleshopping process.471 While the Final 

Rule’s disclosure requirements may 

result in limited additions to the 


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472 Id. 

473 Id. 

474 Id. 

475NPRM at 42034–35. 

476Our review of dealer transaction records 

suggests that a typical transaction generates 3.4 MB 

of data under the status quo. Given the average 

number of transactions per dealer, this suggests that 

storing all these records would require dedicated 

space of roughly 4.2 GB per year. With a two-year 

retention window, this corresponds to 8.4 GB of 

storage at any given time. We estimate that the 

(annual) amount budgeted here should be sufficient 

to maintain at least 1 TB of storage—either on 

premises or through a cloud storage vendor—which 

is sufficient for more than 100 times the data 

storage capacity necessary to retain all transaction 

files generated by a typical dealership in a year 

under the status quo. The Commission anticipates 

that this amount of data storage capacity will be 

more than sufficient to also allow for dealers to 

keep any necessary records of correspondence with 

consumers who ultimately do not complete 

transactions at the dealership. 

477See Public Law 104–121 (1996). 

478 5 U.S.C. 603(a), 604(a). 

479 5 U.S.C. 605(b). 

480NPRM at 42035. 

481See, e.g., Press Release, Fed. Trade Comm’n, 

‘‘FTC Proposes Rule to Ban Junk Fees, Bait-andSwitch Tactics Plaguing Car Buyers’’ (June 23, 

2022), https://www.ftc.gov/news-events/news/pressreleases/2022/06/ftc-proposes-rule-ban-junk-feesbait-switch-tactics-plaguing-car-buyers; Lesley Fair, 

‘‘Proposed FTC Rule Looks Under the Hood at the 

Car Buying Process,’’ Fed. Trade Comm’n Business 

Blog (June 23, 2022), https://www.ftc.gov/businessguidance/blog/2022/06/proposed-ftc-rule-looksunder-hood-car-buying-process; Alan S. Kaplinsky, 

A Close Look at The Federal Trade Commission’s 

Proposed Rule for Motor Vehicle Dealers, with 

Special Guests Sanya Shahrasbi and Daniel Dwyer, 

Staff Attorneys, FTC Bureau of Consumer 

Protection, Division of Financial Practices, 

Consumer Finance Monitor (Aug. 11, 2022), https:// 

www.ballardspahr.com/Insights/Blogs/2022/08/ 

Podcast-The-FTCs-Proposed-Rule-Motor-VehicleDealer-Guests-Sanya-Shahrasbi-and-Daniel-Dwyer. 

482Each year since FY2002, the Small Business 

Administration’s Office of the National 

Ombudsman has rated the Federal Trade 

Commission an ‘‘A’’ on its small business 

compliance assistance work. See U.S. Small 

Business Administration, ‘‘2013–2020 SBA Nat’l 

Ombudsman’s Ann. Reps. to Cong.,’’ https://

www.sba.gov/document/report—nationalombudsmans-annual-reports-congress (providing 

reports from FY2013–FY2020); Letter from Joseph 

J. Simons, Chairman of the Federal Trade 

Commission, to Senator James Risch, Chairman of 

the Committee on Small Business and 

Entrepreneurship, U.S. Senate, and to Congressman 

Steve Chabot, Chairman of the Committee on Small 

Business, U.S. House of Representatives, https://

www.ftc.gov/system/files/documents/reports/ 

federal-trade-commission-rule-compliance-guidessmall-businesses-other-small-entities-commission/ 

tenth_section_212_report_to_congress_july_2016- 

june_2017_1_0.pdf (citing Commission’s ‘‘A’’ rating 

for ‘‘Compliance Assistance’’ by the National 

Ombudsman from FY2002–FY2016). 

483The Commission received 27,349 comment 

submissions filed in response to its NPRM. See Gen. 

Servs. Admin., Doc. No. FTC–2022–0046–0001, 

Proposed Rule, Motor Vehicle Dealers Trade 

Regulation Rule (July 13, 2022), https://

www.regulations.gov/document/FTC-2022-0046- 

0001 (noting comments received). To facilitate 

public access, 11,232 such comments have been 

posted publicly at www.regulations.gov. Id. (noting 

posted comments). Posted comment counts reflect 

the number of comments that the agency has posted 

to Regulations.gov to be publicly viewable. 

Agencies may choose to redact or withhold certain 

Continued 

information that must be provided 

during the transaction process, 

depending on a dealer’s current 

business operations, the Commission 

anticipates that these changes will not 

require substantial investments in new 

systems.472 Further, many dealers may 

elect to furnish some disclosures 

electronically, further reducing total 

costs.473

The Commission previously estimated 

non-labor costs for providing 

disclosures in written or electronic 

form. This estimate was based on 

proposed § 463.5(b), which required 

written disclosures in all transactions in 

which dealers charge for optional addons. As discussed in the paragraph-byparagraph analysis of § 463.5 in SBP 

III.E.2, the Commission has determined 

not to finalize the proposed provision at 

§ 463.5(b). While some commenters 

generally discussed burden with respect 

to disclosure requirements being 

finalized by the Commission, no 

commenter estimated non-labor costs 

associated with such requirements. The 

Commission estimates that the nonlabor costs related to disclosures, which 

relate to fundamental information (the 

vehicle offering price, that optional addons are not required, and regarding the 

total amount to purchase or lease the 

vehicle), will be de minimis. 

2. Recordkeeping 

In the NPRM, the Commission 

observed that dealers already have in 

place existing recordkeeping systems for 

the storage of documentation they 

would retain in the ordinary course of 

business irrespective of the Rule’s 

requirements.474 Commenters including 

industry associations, a dealership 

organization, and a dealership 

association argued that the Commission 

underestimated the burdens associated 

with the Commission’s proposed 

requirements to retain written 

communications, as well as the need to 

develop new systems to capture these 

materials. The Commission disagrees 

that the recordkeeping requirements in 

§ 463.6 mandate the creation of new 

recordkeeping systems. As explained in 

the section-by-section analysis of 

§ 463.6, this provision gives dealers the 

flexibility to retain materials in any 

legible form, including in the same 

manner, format, or place as they may 

already keep such records in the 

ordinary course of business. 

The Commission is, however, revising 

its estimates regarding incremental 

storage expenses that may be associated 

with the recordkeeping requirements in 

the Final Rule to add such 

recordkeeping storage costs to its 

estimate. The Commission previously 

noted, and continues to believe, that 

dealers that store records in hard copy 

are unlikely to require extensive 

additional storage for physical 

document retention, and, due to the low 

cost of electronic storage options, that 

expanding electronic storage capacity 

would impose minimal costs.475 The 

Commission also invited comments on 

estimated storage costs; while some 

commenters generally discussed 

burdens, as addressed in the section-bysection analysis of the recordkeeping 

requirements in § 463.6, that they 

contended would accompany the 

proposed provisions, the Commission 

did not receive any comments that 

provided estimates. The Commission 

nevertheless has conducted additional 

research, and now estimates that each 

dealer will need to spend approximately 

$300 per year in investment in 

additional IT systems and hardware for 

additional storage (either on premises or 

electronically) to retain records, the 

annual cost for which would be 

$14,181,300 for all covered dealers 

($300 × 47,271 covered dealers).476

VI. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(‘‘RFA’’), as amended by the Small 

Business Regulatory Enforcement 

Fairness Act of 1996,477 requires an 

agency to provide an Initial Regulatory 

Flexibility Analysis (‘‘IRFA’’) and Final 

Regulatory Flexibility Analysis 

(‘‘FRFA’’) of any rule subject to noticeand-comment requirements,478 unless 

the agency head certifies that the 

regulatory action will not have a 

significant economic impact on a 

substantial number of small entities.479

In the NPRM, the Commission provided 

an IRFA, stated its belief that the 

proposal will not have a significant 

economic impact on small entities, and 

solicited comments on the burden on 

any small entities that would be 

covered.480 In addition to publishing the 

NPRM in the Federal Register, the 

Commission announced the proposed 

rule through press releases, social media 

posts, and blog articles directed toward 

businesses and consumers, as well as 

through other outreach,481 in keeping 

with the Commission’s history of small 

business guidance and outreach.482

The Commission thereafter received 

over 27,000 public comments, many of 

which identified themselves as being 

from small dealers, industry 

associations that represent small 

dealers, and employees of small 

dealers.483 The Commission greatly 


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submissions (or portions thereof) such as those 

containing private or proprietary information, 

inappropriate language, or duplicate/near duplicate 

examples of a mass-mail campaign. Gen. Servs. 

Admin., Regulations.gov Frequently Asked 

Questions, https://regulations.gov/faq. 

484The Office of Advocacy has emphasized that, 

while it is housed within SBA, it is an independent, 

stand-alone office that has its own statutory charter, 

leadership structure, and appropriations account. 

SBA Advocacy, ‘‘Background Paper: Office of 

Advocacy 2017–2020’’ 111–19 (Jan. 2021), https:// 

advocacy.sba.gov/wp-content/uploads/2021/02/ 

Background-Paper-Office-of-Advocacy-2017-2020- 

web.pdf; see also 15 U.S.C. 634a through 634g. SBA 

Advocacy’s Chief Counsel is appointed from 

civilian life by the President, with the advice and 

consent of the Senate, and most of SBA Advocacy’s 

professionals serve at the pleasure of the Chief 

Counsel. 15 U.S.C. 634a, 634d(1) (empowering 

Chief Counsel for Advocacy to employ and fix the 

compensation of additional staff personnel); SBA 

Advocacy, ‘‘Background Paper: Office of Advocacy 

2017–2020’’ 95 (Jan. 2021), https://advocacy.sba.

gov/wp-content/uploads/2021/02/BackgroundPaper-Office-of-Advocacy-2017-2020-web.pdf. SBA 

Advocacy does not circulate its work for clearance 

with the SBA Administrator, OMB, or any other 

Federal agency prior to publication. 15 U.S.C. 634f. 

485An industry association commenter argued 

that the Commission did not make a formal section 

605(b) certification, publish the certification in the 

Federal Register, or provide the certification to the 

Chief Counsel for Advocacy of the Small Business 

Administration. This comment misunderstands the 

RFA. The RFA does not require certification when 

a rule is proposed. See 5 U.S.C. 605(b) (providing 

that the head of the agency may make the 

certification ‘‘at the time of publication of the final 

rule’’). The Commission’s NPRM stated its belief 

that the proposal would not have a significant 

economic impact on a substantial number of small 

entities, invited comment on this issue, and also 

provided an IRFA. The Commission has carefully 

reviewed the SBA’s and others’ comments, is 

making changes to the proposal, and is now 

publishing the Final Rule and making a formal 

certification, as is required by the RFA. 

Although the Commission included the NPRM in 

its Fall 2022 Regulatory Agenda, and explained in 

its NPRM that the proposed rulemaking was not 

included in the Commission’s Spring 2022 

Regulatory Agenda because the Commission first 

considered the NPRM after the publication deadline 

for the Regulatory Agenda, see NPRM at 42031 

n.153, the same commenter argued that the RFA 

and Executive Order 12866 required the 

Commission to include it in earlier Regulatory 

Agendas. As an initial matter, Executive Order 

12866 does not apply to independent agencies such 

as the FTC. Regardless, as discussed in SBP II.C, 

Commission has engaged in a sustained effort over 

many years to engage with consumer and dealer 

groups, and other stakeholders, regarding the issues 

addressed in the Rule. See supra note 90. Neither 

the RFA nor Executive Order 12866 precludes the 

Commission from promulgating the Rule regardless 

of whether it was included in an earlier Regulatory 

Agenda (or even arguably could have been). Section 

602(d) of the RFA explicitly provides that 

‘‘[n]othing in this section precludes an agency from 

considering or acting on any matter not included in 

a regulatory flexibility agenda.’’ See Coastal 

Conservation Ass’n v. Locke, No. 2:09–CV–641– 

FTM–29, 2011 WL 4530631, at *38 (M.D. Fla. Aug. 

16, 2011), report & recommendation adopted sub 

nom. Coastal Conservation Ass’n v. Blank, No. 

2:09–CV–641–FTM–29, 2011 WL 4530544 (M.D. 

Fla. Sept. 29, 2011) (denying request for injunction 

based on allegation of noncompliance with 5 U.S.C. 

602(d)). Similarly, Executive Order 12866 explicitly 

provides that it ‘‘does not create any right or 

benefit, substantive or procedural, enforceable at 

law or equity by a party against the United States,’’ 

let alone one that would preclude adoption of the 

Rule. See E.O. 12866, 58 FR 51735, 51744 (Sept. 30, 

1993); see also Trawler Diane Marie, Inc. v. Brown, 

918 F. Supp. 921, 932 (E.D.N.C. 1995), aff’d sub 

nom. Trawler Diane Marie, Inc. v. Kantor, 91 F.3d 

134 (4th Cir. 1996) (denying request to invalidate 

regulation based on allegation of noncompliance 

with Executive Order 12866). 

486See Comment of SBA Advocacy, Doc. No. 

FTC–2022–0046–6664 at 3. 

487Comment of SBA Advocacy, Doc. No. FTC– 

2022–0046–6664 at 3. 

488Comment of SBA Advocacy, Doc. No. FTC– 

2022–0046–6664 at 3. 

489After additional research, the Commission 

estimates that each dealer will need to spend 

approximately $300 per year on storage (either on 

premises or in the cloud) to store the records the 

Rule requires them to maintain. Based on a review 

of the transaction records the Commission has 

received from dealers through investigations, this 

amount is likely to be more than sufficient. 

Commission review suggests that a typical vehicle 

transaction generates 3.4 MB of data under the 

status quo. Given the average number of 

transactions per dealer, this suggests that storing all 

these records would require dedicated space of 

roughly 4.2 GB per year. With a two-year retention 

window, this corresponds to 8.4 GB of storage at 

any given time. The Commission estimates that the 

$300 annual amount budgeted here should be 

sufficient to maintain at least 1 TB of storage— 

either on premises or through a cloud storage 

vendor—which is sufficient for more than 100 times 

the data storage capacity necessary to retain all 

transaction files generated by a typical dealership 

in a year under the status quo. The Commission 

appreciates, and thoroughly considered, 

the feedback it received from such 

stakeholders in developing the Final 

Rule; made changes from the proposed 

rule in response to such feedback; and 

will continue to engage with 

stakeholders moving forward to 

facilitate implementation of the Rule. 

As previously discussed, after 

reviewing comments, the Commission 

has determined, as an alternative to 

finalizing the proposed rule in its 

entirety, to finalize a Rule that does not 

contain the proposed add-on list 

disclosure requirements at § 463.4(b), or 

the proposed disclosures and 

declinations pertaining to a vehicle’s 

cash price without optional add-ons at 

§ 463.5(b). Furthermore, as discussed in 

the paragraph-by-paragraph analysis of 

§ 463.2(e) in SBP III.B.2(e), in response 

to public comments and after careful 

consideration, the Commission has 

determined to exclude recreational 

boats and marine equipment; 

motorcycles; and motor homes, 

recreational vehicle trailers, and slide-in 

campers from the Rule’s definition of 

‘‘Covered Motor Vehicle.’’ After careful 

consideration of the comments and 

following its determination not to 

finalize the proposed rule in its entirety, 

the Commission is certifying that the 

Final Rule will not have a significant 

economic impact on a substantial 

number of small entities. In the 

following paragraphs, the Commission 

discusses comments from the public, as 

well as from the U.S. Small Business 

Administration Office of Advocacy 

(‘‘SBA Advocacy’’), and the reasons for 

the Commission’s conclusion that the 

Rule will not have a significant 

economic impact on a substantial 

number of small entities.484 Given, 

however, that the Commission believes 

that the vast majority of covered entities 

are small entities and provided an IRFA 

in the NPRM, in the interest of 

thoroughness, the Commission has also 

performed an FRFA, as described in 

SBP VI.B.2. 

A. Significant Impact Analysis 

1. Comments on Significant Impact 

In the NPRM, the Commission stated 

its belief that the proposed rule would 

not have a significant economic impact 

on a substantial number of small 

entities, and invited comments.485

Several commenters, including industry 

associations and a dealership 

association, generally argued that the 

Rule would impose substantial 

economic burdens on small entities, and 

some suggested that small entities may 

be disproportionately burdened by the 

Rule given limited legal and compliance 

staff. No commenters provided 

comprehensive alternative empirical 

cost or revenue data that could be used 

to put costs in context. Commenters, 

including an industry association and 

SBA Advocacy, argued that the 

Commission did not provide a sufficient 

factual basis for, or analysis of, the 

effects on small entities, and that the 

proposed rule would be unduly 

burdensome for smaller motor vehicle 

dealers.486 The comment from SBA 

Advocacy further argued that the 

Commission provided no information 

about the economic impact of the 

proposed rule on small entities, but 

noted that if the total estimated cost of 

$1,360,694,552 were divided by the 

number of dealers estimated in the 

NPRM (46,525), the cost would be 

roughly $29,000 per such dealer.487 The 

comment from SBA Advocacy also 

argued that the Commission failed to 

include familiarization and training 

costs or costs that the Commission 

could not quantify, such as investments 

in additional IT systems and 

hardware.488

The Commission has considered these 

comments carefully and has taken them 

into account in setting forth the factual 

basis for the certification in SBP VI.A.2, 

including by modifying its analysis to 

add an estimate of familiarization and 

training costs in response to such 

concerns.489 The Commission notes, as 


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anticipates that this amount of data storage capacity 

will be more than sufficient to also allow for dealers 

to keep any necessary records of correspondence 

with consumers who ultimately do not complete 

transactions at the dealership. 

490NPRM at 42013. 

491As noted in the NPRM, new vehicle dealers 

averaged a gross profit of about $2,444 per new 

vehicle, and about $2,675 per used vehicle, and 

independent used vehicle dealerships had an 

average gross profit of more than $6,000 per vehicle. 

See NPRM at 42014 (citing Nat’l Auto Dealers 

Ass’n, ‘‘Average Dealership Profile’’ 1 (2020), 

https://www.nada.org/media/4136/ 

download?attachment [http://web.archive.org/web/ 

20220623204158/https://www.nada.org/media/ 

4136/download?attachment] (June 23, 2022) and 

Nat’l Indep. Auto Dealers Ass’n, ‘‘NIADA Used Car 

Industry Report 2020’’ at 21). 

492Notably, while many industry commenters 

claimed that the burden of the Rule would be 

substantial, none provided data on revenue or 

profit. 

493U.S. Census Bureau, ‘‘Annual Retail Trade 

Survey: 2021’’ (Dec. 15, 2022), https://

www.census.gov/data/tables/2021/econ/arts/ 

annual-report.html. Gross margin minus operating 

expenses was determined by deducting total 2021 

operating expenses ($144,268 million) from 2021 

gross margin ($226,118 million). Gross margin 

represents total sales less the cost of goods sold. 

Operating expenses include but are not limited to 

annual payroll, commissions, data processing, 

equipment, advertising, lease and rental payments, 

utilities, and repair and maintenance. See Glossary, 

U.S. Census Bureau, https://www.census.gov/ 

glossary (last visited Dec. 5, 2023). Note that the 

operating expenses amount may include some 

costs—such as payments for deceptive advertising 

or commissions earned on unauthorized charges— 

that are not legitimate expenses. If these were 

excluded, the gross margin minus operating cost 

figures would be even lower than those described 

in the text. 

494See North American Industry Classification 

System, U.S. Census Bureau, https://

www.census.gov/naics/. These standards are 

determined by the Small Business Size Standards 

component of the NAICS, which is available at 

https://www.sba.gov/document/support-table-sizestandards. 

495The census report does not provide sufficient 

detail to provide a precise numerical estimate of the 

number of small entities covered by the Rule. The 

census data provide the number of dealers with 

fewer than 250 employees, and also provide 

revenue and gross margin figures for the motor 

vehicle dealers industry, without further 

breakdown. For that reason, the census data do not 

provide sufficient information to calculate the 

specific number of dealers that are small entities. 

Nor did commenters provide comprehensive 

alternative firm size data. 

496The $1.075 billion figure was determined by 

summing the unrounded total highest estimated 

costs associated with the Final Rule’s total of 

payments disclosure requirements ($246 million), 

offering price disclosure requirements ($46 

million), requirements regarding certain add-ons 

and express, informed consent ($406 million), 

prohibitions on misrepresentations ($130 million), 

and recordkeeping requirements ($248 million), 

using a 7% discount rate. The $1.270 billion figure 

was determined by summing the unrounded total 

highest estimated costs associated with the Final 

Rule’s total of payments disclosure requirements 

($296 million), offering price disclosure 

requirements ($46 million), requirements regarding 

certain add-ons and express, informed consent 

($475 million), prohibitions on misrepresentations 

($157 million), and recordkeeping requirements 

($296 million), using a 3% discount rate. 

497U.S. Census Bureau, ‘‘Annual Retail Trade 

Survey: 2021, Sales’’ (Dec. 15, 2022), https://

www2.census.gov/programs-surveys/arts/tables/ 

2021/sales.xlsx (showing $1,264,635 million in 

estimated annual sales in 2021 for automobile 

dealers, NAICS code 4411); U.S. Census Bureau, 

‘‘Annual Retail Trade Survey: 2021, Gross Margin’’ 

(Dec. 15, 2022), https://www2.census.gov/programssurveys/arts/tables/2021/gm.xlsx (showing 

$226,118 million in estimated annual gross margin 

in 2021 for automobile dealers, NAICS code 4411); 

U.S. Census Bureau, ‘‘Annual Retail Trade Survey: 

2021, Total Operating Expenses’’ (Dec. 15, 2022), 

https://www2.census.gov/programs-surveys/arts/ 

tables/2021/exp.xlsx (showing $144,268 million in 

estimated annual operating expenses in 2021 for 

automobile dealers, NAICS code 4411). 

498The calculations in this analysis were 

performed using unrounded inputs in order to 

maintain accuracy. Nevertheless, for ease of 

reference, such inputs have been rounded where 

they are described in the text. 

SBA Advocacy did in its comment, that 

the NPRM estimated a total cost for the 

proposed rule of $1,360,694,552. This 

estimate was for costs over a ten-year 

time period. Thus, dividing this 

estimate by the number of affected 

dealers estimated in the NPRM yields a 

cost of roughly $29,000 per dealer over 

a ten-year period—or approximately 

$2,900 per year per dealer.490 This 

figure—$2,900—is slightly more than 

the average gross profit described in the 

NPRM for a single vehicle sale by a new 

vehicle dealer, and less than half of the 

average gross profit described in the 

NPRM for a single vehicle sale by an 

independent used vehicle dealer.491

After carefully reviewing the 

comments, the Commission does not 

conclude that the Final Rule will 

impose a significant economic burden 

on a substantial number of smaller 

entities.492 As described in SBP 

VI.A.2(b), the estimated economic 

impact of the Final Rule, controlling for 

firm size based on available census data, 

is less than or equal to 0.27% of annual 

sales, 1.49% of the gross margin, and 

4.12% of the gross margin minus 

operating expense for dealerships of all 

sizes.493 The Commission further notes 

that, in response to comments from SBA 

Advocacy and others, the Paperwork 

Reduction Act analysis incorporates 

additional estimates for training and 

storage costs beyond those estimated in 

the NPRM. 

2. Certification of the Final Rule 

The Commission hereby certifies that 

the Final Rule will not have a 

significant economic impact on a 

substantial number of small entities. 

As an initial matter, the Commission 

believes that a substantial number of 

small entities are covered by the Rule. 

New vehicle dealers (NAICS code 

44111) are classified as small entities if 

they have an average of 200 or fewer 

employees, and used car dealers (NAICS 

code 44112) are classified as small 

entities if they have average annual 

revenues of $30.5 million or less.494

Census data indicate that the vast 

majority of dealers classified into these 

NAICS codes are small entities.495 There 

are approximately 47,271 covered 

dealers in the United States, of which 

over 93% have fewer than 100 

employees. Thus, while the Commission 

cannot determine the precise number of 

small entities affected by the Rule, 

census data suggest that the vast 

majority of covered dealers are small 

entities. 

The Commission certifies that the 

Rule will not have a significant 

economic impact on a substantial 

number of small entities. The 

Commission has analyzed the costs of 

the Rule (1) based on industry averages 

and (2) accounting for dealer size based 

on the number of employees. Under 

either measure, the Rule will not have 

a significant economic impact on a 

substantial number of small entities. 

(a) Industry Averages 

The Commission estimates a total cost 

for the Final Rule, at the scenario 

reflecting the Commission’s highest cost 

estimates, of $1.075 billion to $1.270 

billion over a ten-year period.496 Using 

the highest end of this highest-cost 

scenario, the Rule will have an 

estimated cost of $1.270 billion over ten 

years using a 3% discount rate. This 

translates to an average estimated peryear cost of $127 million ($1.270 billion 

× 0.1). Census data show that, in 2021, 

automobile dealers had annual sales of 

$1.265 trillion, gross margin of $226.118 

billion,497 and gross margin minus 

operating expenses of $81.850 billion. 

Discounting these numbers over a 10- 

year period using a 3% discount rate 

equates to average annual sales of 

$1.079 trillion, gross margin of $192.883 

billion, and gross margin minus 

operating expenses of $69.820 billion. 

The estimated yearly cost of the Rule 

therefore is approximately 0.01% of 

annual sales ($127 million/$1.079 

trillion), 0.07% of gross margin ($127 

million/$192.883 billion), and 0.18% of 

gross margin minus operating expenses 

($127 million/$69.820 billion) across 

the industry.498

(b) Dealer Size Based on the Number of 

Employees 

In addition to considering industry 

averages, the Commission has analyzed 

the cost of the Rule accounting for 

dealer size based on the number of 

employees. Certain costs are fixed (i.e., 

remain the same regardless of the 

number of employees) while other costs 

scale with dealer size. We consider both 


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668 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

499As used here, ‘‘pricing hours’’ means time 

spent by a sales and marketing manager reviewing 

dealership policies and procedures for determining 

the public-facing prices of vehicles in inventory. 

500Applicable wage rates throughout this section 

are based on data from the Bureau of Labor 

Statistics. See U.S. Bureau of Labor Statistics, ‘‘May 

2022 National Industry-Specific Occupational 

Employment and Wage Estimates NAICS 441100— 

Automobile Dealers’’ (Apr. 25, 2023), https://

www.bls.gov/oes/current/naics4_441100.htm. 

501Based on 2021 census data, dealers with fewer 

than five employees have an average of 1.62 

employees (34,616 employees at all dealerships 

with fewer than five employees/21,356 dealers with 

fewer than five employees); dealers with 5–9 

employees have an average of 6.50 employees 

(35,794 employees/5,507 dealers); dealers with 10– 

19 employees have an average of 13.77 employees 

(52,852 employees/3,837 dealers); dealers with 20– 

49 employees have an average of 33.62 employees 

(253,365 employees/7,536 dealers); dealers with 

50–99 employees have an average of 69.52 

employees (423,351 employees/6,090 dealers); 

dealers with 100–249 employees have an average of 

140.31 employees (386,001 employees/2,751 

dealers); dealers with 250–499 employees have an 

average of 317.25 employees (57,105 employees/180 

dealers); dealers with 500–999 employees have an 

average of 580.56 employees (5,225 employees/9 

dealers); and dealers with 1,000 or more employees 

have an average of 1,913.60 employees (9,568 

employees/5 dealers). See U.S. Census Bureau, ‘‘All 

Sectors: County Business Patterns, Including ZIP 

Code Business Patterns, by Legal Form of 

Organization and Employment Size Class for the 

U.S., States, and Selected Geographies: 2021,’’ 

https://data.census.gov/table?q=CB2100CBP&n=

44111:44112&tid=CBP2021.CB2100CBP&nkd=

LFO∼001. 

(1) first-year compliance costs and (2) 

costs in subsequent years. 

(1) First-year compliance costs. Firstyear compliance costs are the sum of: (1) 

upfront fixed costs; (2) one year of 

annual ongoing costs that are fixed; and 

(3) one year of annual ongoing costs that 

scale. 

The Commission estimates the 

upfront fixed costs per dealer under the 

highest-cost scenario as follows: $963.44 

to update policies and procedures to 

provide the offering price disclosure 

required by § 463.4(a) ((8 estimated 

pricing hours 499 × $80.19 per hour) + (8 

estimated programming hours × $40.24 

per hour)); $249.68 to design disclosures 

required by § 463.4(d) and (e) and 

inform associates of their obligations to 

provide these disclosures (8 estimated 

compliance manager hours × $31.21 per 

hour); $1,783.56 to cull add-ons with no 

consumer benefit from offerings, 

develop policies regarding when certain 

add-ons may or may not be sold, and 

create nonmandatory disclosures, in 

response to the requirements of § 463.5 

((16 estimated compliance manager 

hours × $31.21 per hour) + (12 estimated 

sales manager hours × $80.19 per hour) 

+ (8 estimated programmer hours × 

$40.24 per hour)); and $534.12 to 

upgrade recordkeeping systems and 

create the templates necessary to 

accommodate retention of all relevant 

material under § 463.6 ((8 estimated 

programmer hours × $40.24 per hour) + 

(5 estimated clerical hours × $20.16 per 

hour) + (1 estimated sales manager hour 

× $80.19 per hour) + (1 estimated 

compliance manager hour × $31.21 per 

hour)). These figures total $3,530.80 per 

dealer.500

The Commission estimates the annual 

fixed ongoing costs per dealer for the 

first year under the highest-cost scenario 

as follows: $390.13 to conduct a 

heightened compliance review of 

public-facing representations to ensure 

compliance with § 463.3 (150 estimated 

documents per year × 5 estimated 

minutes of review per document × 

$31.21 per hour of compliance officer 

review); and $300 estimated for 

expanded storage to retain records 

required under § 463.6. These figures 

total $690.13 per dealer per year. 

The Commission estimates annual 

ongoing costs that scale with dealer size 

based on number of employees as 

follows. The Commission estimates that 

annual costs that scale with dealer size 

are $76.86 per employee per year. 

Annual ongoing costs that scale with 

dealer size include: $26.53 per 

employee to provide the total of 

payments disclosures required by 

§ 463.4(d) and (e) (((417,110 sales & 

related employees × 1 estimated hour 

for training × $29.43 per hour) + 

(19,228,256 total covered transactions 

involving monthly payments or 

financing × (2/60 estimated disclosure 

hours per transaction × $28.41 per hour 

+ $0.15 printing costs per disclosure)))/ 

1,257,877 total employees); $36.40 per 

employee for training and the delivery 

of a disclosure under a regime in which 

dealers choose to deliver an itemized 

disclosure to comply with § 463.5 

(((417,110 sales & related employees × 1 

estimated hour for training × $29.43 per 

hour) + ((10,343,319 new vehicle sales 

+ 21,219,640 used vehicle sales) × (2/60 

estimated disclosure hours per sale 

transaction × $28.41 per hour + $0.11 

physical costs per disclosure)))/ 

1,257,877 total employees); and $13.93 

per employee to generate and store 

calculations required to be retained 

under § 463.6 ((31,562,959 vehicle sales 

× 1/60 estimated hours per transaction 

× $28.41 per hour/1,257,877 total 

employees) + (5,444,502 vehicle sales 

with GAP agreement × 1/60 estimated 

hours per transaction × $28.41 per hour/ 

1,257,877 total employees)). 

Next, the Commission uses census 

data on the average number of 

employees at dealerships within 

different dealer size cohorts to 

determine the per-dealer cost for each 

dealer cohort.501 Multiplying the 

estimated cost per employee ($76.86) by 

the average number of employees within 

different dealer size cohorts yields 

annual ongoing scaled costs per dealer 

of: $124.59 per dealer with fewer than 

5 employees ($76.86 × 1.62 employees); 

$499.59 per dealer with between 5 and 

9 employees ($76.86 × 6.50 employees); 

$1,058.73 per dealer with between 10 

and 19 employees ($76.86 × 13.77 

employees); $2,584.18 per dealer with 

between 20 and 49 employees ($76.86 × 

33.62 employees); $5,343.19 per dealer 

with between 50 and 99 employees 

($76.86 × 69.52 employees); $10,784.88 

per dealer with between 100 and 249 

employees ($76.86 × 140.31 employees); 

$24,384.79 per dealer with between 250 

and 499 employees ($76.86 × 317.25 

employees); $44,623.26 per dealer with 

between 500 and 999 employees ($76.86 

× 580.56 employees); and $147,085.08 

per dealer with 1,000 or more 

employees ($76.86 × 1,913.60 

employees). 

Thus, the total first-year compliance 

costs based on dealer size are $4,345.51 

($3,530.80 + $690.13 + $124.59) per 

dealer with fewer than 5 employees; 

$4,720.51 ($3,530.80 + $690.13 + 

$499.59) per dealer with between 5 and 

9 employees; $5,279.66 ($3,530.80 + 

$690.13 + $1,058.73) per dealer with 

between 10 and 19 employees; 

$6,805.11 ($3,530.80 + $690.13 + 

$2,584.18) per dealer with between 20 

and 49 employees; $9,564.12 ($3,530.80 

+ $690.13 + $5,343.19) per dealer with 

between 50 and 99 employees; 

$15,005.80 ($3,530.80 + $690.13 + 

$10,784.88) per dealer with between 100 

and 249 employees; $28,605.72 

($3,530.80 + $690.13 + $24,384.79) per 

dealer with between 250 and 499 

employees; $48,844.18 ($3,530.80 + 

$690.13 + $44,623.26) per dealer with 

between 500 and 999 employees; and 

$151,306.01 ($3,530.80 + $690.13 + 

$147,085.08) per dealer with 1,000 or 

more employees. 

To analyze the economic effect of the 

costs of the Rule by dealer size, the 

Commission compares per-dealer costs 

to per-dealer sales, gross margin, and 

gross margin minus operating expenses. 

The Commission does not have data on 

how sales, gross margin, and operating 

expenses are apportioned to dealerships 

based on the number of employees. 

Accordingly, the Commission assumes 

that sales, gross margin, and operating 

expenses are apportioned to dealerships 

pro rata with the number of employees. 

Dividing the 2021 industry-wide figures 

for annual sales ($1.265 trillion), gross 

margin ($226.118 billion), and gross 

margin minus operating expenses 

($81.850 billion) by the total number of 


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Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 669 

502 Data on the number of employees comes from 

the 2021 census. See U.S. Census Bureau, ‘‘All 

Sectors: County Business Patterns, Including ZIP 

Code Business Patterns, by Legal Form of 

Organization and Employment Size Class for the 

U.S., States, and Selected Geographies: 2021,’’ 

https://data.census.gov/table?q=CB2100CBP&n=

44111:44112&tid=CBP2021.CB2100CBP&nkd=

EMPSZES∼001,LFO∼001. 

503Average ongoing compliance costs after the 

first year equal: 0.05% of annual sales, 0.28% of 

gross margin, and 0.77% of gross margin minus 

operating expenses for dealers with fewer than 5 

employees, and less than one-half of one percent of 

annual sales, gross margin, and gross margin minus 

operating expenses for the remaining categories of 

dealers. 

504Comment of SBA Advocacy, Doc. No. FTC– 

2022–0046–6664 at 6. SBA Advocacy also raised 

concerns that the proposal could make the buying 

process more cumbersome and confusing, noting 

that the proposal requires additional disclosures, 

and the proposal prohibited dealers from relying on 

a signed or initialed document, by itself, or 

prechecked boxes to establish express, informed 

consent. These arguments are addressed in the 

discussion of disclosures in §§ 463.4, 463.5 and the 

definition of ‘‘Express, Informed Consent’’ in 

§ 463.2. 

The industry group also argued that the number 

of complaints is overstated because it includes: (1) 

complaints that are not applicable to motor vehicle 

dealers or conduct addressed by the Rule, and (2) 

consumers who did not report a loss. This industry 

group also argued that the Commission failed to 

take notice of survey data indicating that the 

majority of consumers are satisfied with their 

vehicle purchases. See, e.g., Cox Auto., ‘‘2021 Cox 

Automotive Car Buyer Journey Study’’ (2022) 

[hereinafter 2021 Cox Automotive Car Buyer 

Journey Study], https://www.coxautoinc.com/wpcontent/uploads/2022/01/2021-Car-Buyer-JourneyStudy-Overview.pdf. First, in the Commission’s 

experience, complaints understate harm caused by 

unlawful conduct in a given category, 

notwithstanding any inclusion of complaints that 

may pertain to ancillary or related issues. See SBP 

II.B (discussing how complaints represent the tip of 

the iceberg in terms of actual consumer harm and 

citing case where prior to FTC action, there were 

391 complaints about add-ons and other issues but 

survey results during the same period indicted that 

at least 16,848 customers were subject to unlawful 

practices related to add-ons alone). Moreover, the 

Commission’s reported complaint numbers may be 

underinclusive of relevant complaints filed by 

consumers (e.g., complaints about vehicle financing 

issues may be filed under the ‘‘Banks and Lenders’’ 

category; vehicle repossession issues may be filed 

under the ‘‘Debt Collection’’ category; and 

complaints about deceptive online vehicle 

shopping may be filed under the ‘‘Online Shopping 

and Negative Reviews’’ category). With regard to 

consumers who did not report a loss, the 

Commission disagrees that such consumers were 

not harmed or that their experience is not relevant 

to the Rule. For example, many consumers 

experience a law violation or other harmful 

conduct, but choose not to consummate the 

transaction, including consumers who waste time 

pursuing misleading offers. Further, survey data 

indicating that a majority of customers are 

‘‘satisfied’’ do not indicate whether those customers 

had hidden charges in their contracts and whether 

they ever became aware of such charges. Surveys 

cited by the Commission have identified situations 

where customers are unaware of add-on charges in 

their contracts; indeed, in one case, 79% of 

consumers were unaware of such charges. See SBP 

II.B (discussing hidden charges in auto contracts). 

Consumers might be satisfied with a purchase until 

they later learn they are paying for items they did 

not authorize, if they learn this at all. Further, ‘‘the 

FTC need not prove that every consumer was 

injured. The existence of some satisfied customers 

does not constitute a defense . . . .’’ Fed. Trade 

Comm’n v. Amy Travel Serv., Inc., 875 F.2d 564, 

572 (7th Cir. 1989), vacated in part on other 

grounds, Fed. Trade Comm’n v. Credit Bureau Ctr., 

LLC, 937 F.3d 764 (7th Cir. 2019); accord Fed. 

Trade Comm’n v. Stefanchik, 559 F.3d 924, 929 

n.12 (9th Cir. 2009). 

employees (1,257,877),502 each 

employee represents an additional 

$1,005,372.54 in sales ($1.265 trillion/ 

1,257,877 employees), $179,761.61 in 

gross margin ($226.118 billion/ 

1,257,877 employees), and $65,069.96 

in gross margin minus operating 

expenses ($81.850 billion/1,257,877 

employees). Multiplying these peremployee figures by the average number 

of employees of dealers within different 

size cohorts provides per-dealer sales, 

gross margin, and gross margin minus 

operating expenses for each cohort. For 

instance, dealers with fewer than 5 

employees have estimated annual sales 

of $1,629,611.16 (1.62 employees × 

$1,005,372.54 sales per employee), 

annual gross margin of $291,376.10 

(1.62 employees × $179,761.61 gross 

margin per employee), and annual perdealer gross margin minus operating 

expenses of $105,472.17 (1.62 

employees × $65,069.96 gross margin 

minus operating expenses per 

employee). 

The Commission then divides firstyear compliance costs by these figures 

to yield cost as a percentage of sales, 

gross margin, and gross margin minus 

operating costs. Applying this method 

to each of the dealer size cohorts, firstyear compliance costs are equivalent to: 

0.27% of annual sales ($4,345.51/ 

$1,629,611.16), 1.49% of gross margin 

($4,345.51/$291,376.10), and 4.12% of 

gross margin minus operating expenses 

($4,345.51/$105,472.07) for dealers with 

fewer than 5 employees; 0.07% of 

annual sales ($4,720.51/$6,534,647.69), 

0.40% of gross margin ($4,720.51/ 

$1,168,401.53), and 1.12% of gross 

margin minus operating expenses 

($4,720.51/$422,936.98) for dealers with 

5–9 employees; 0.04% of annual sales 

($5,279.66/$13,848,305.89), 0.21% of 

gross margin ($5,279.66/$2,476,090.91), 

and 0.59% of gross margin minus 

operating expenses ($5,279.66/ 

$896,293.27) for dealers with 10–19 

employees; and less than one-half of one 

percent of the annual sales, gross 

margin, and gross margin minus 

operating expenses for the remaining 

categories of dealers. 

(2) Costs in subsequent years. The 

estimated cost of compliance with the 

Rule drops after the first year, given the 

absence of upfront costs, which are not 

incurred after the first year. Compliance 

costs in subsequent years—which are 

limited to annual ongoing costs (both 

fixed and those that scale with dealer 

size)—are therefore a smaller percentage 

of annual sales, gross margin, and gross 

margin minus operating expenses, equal 

to less than two percent of these metrics 

for dealers of all sizes.503

The Commission does not find that 

these compliance costs represent a 

significant economic burden. The 

Commission therefore certifies that the 

Final Rule will not have a significant 

economic impact on a substantial 

number of small entities. 

B. Initial and Final Regulatory 

Flexibility Analysis 

The NPRM noted the Commission’s 

belief that the proposed rule would not 

have a significant economic impact on 

small entities, but nevertheless 

examined the six IRFA factors, and 

invited comment on the proposed rule’s 

burdens on small businesses. In the 

following paragraphs, the Commission 

discusses comments and then sets forth 

a FRFA. 

1. Comments on the Initial Regulatory 

Flexibility Analysis 

(a) Description of the Reasons Why 

Action by the Agency Is Being 

Considered 

The IRFA explained that the 

Commission proposed the Rule to 

address misleading practices and 

unauthorized charges to consumers 

during the vehicle buying or leasing 

process, and to deter dealer misconduct 

and remedy consumer harm. The 

Commission further noted that its law 

enforcement, outreach and other 

engagement in this area, and the 

hundreds of thousands of consumer 

complaints received by the FTC, 

indicated that dealership misconduct 

and deceptive tactics persisted despite 

Federal and State law enforcement 

efforts. In response, the comments from 

SBA Advocacy and one industry group 

argued that the number of complaints 

received by the Commission is 

insufficient to support a rulemaking 

given the total number of vehicle 

transactions in the United States.504

Similarly, the industry group argued 

that the Commission has not filed 

enough law enforcement actions against 

motor vehicle dealers to justify the 

proposal, and that, where it has brought 

enforcement actions, the Commission 

has managed to obtain redress for 

harmed consumers without the need for 

an additional monetary remedy. As 

explained in SBP II.B and in the sectionby-section analysis of the recordkeeping 

requirements in § 463.6 in SBP III.F, 


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505One industry group argued that the majority 

of the FTC’s enforcement actions have pertained to 

deceptive advertising, and few have alleged 

unlawful conduct involving add-ons. The 

Commission agrees that many of its actions have 

alleged deceptive pricing. In focusing on certain 

actions that involved allegations that dealers placed 

unauthorized charges for add-ons, however, the 

commenter leaves out other unlawful conduct 

related to add-ons. Such conduct includes, for 

example, misrepresentations regarding the pricing 

of add-ons (Complaint ¶¶ 6–12, TT of Longwood, 

Inc., No. C–4531 (F.T.C. July 2, 2015)), or failing to 

disclose that mandatory add-ons were included in 

the cost of credit (Consent Order ¶¶ 73–75, Y King 

S Corp., CFPB No. 2016–CFPB–0001 (Jan. 21, 

2016)). In addition, unauthorized charges are likely 

to go unnoticed by consumers, which can hamper 

enforcement efforts. See, e.g., Auto Buyer Study, 

supra note 25, at 14 (describing several study 

participants who thought they had not purchased 

add-ons, or that add-ons were free, and only learned 

during the study that they were charged for addons). 

506See AMG Cap. Mgmt., LLC v. Fed. Trade 

Comm’n, 141 S. Ct. 1341 (2021). 

507NPRM at 42035. 

508 Id. at 42035. The Commission explained that, 

because of the relative size of the automobile 

market compared to other types of motor vehicle 

dealers, and the greater availability of relevant 

information for this market, its NPRM analysis 

exclusively considered automobile dealers. The 

Commission invited submissions of market 

information for other types of motor vehicles such 

as boats, RVs, and motorcycles that would allow 

expansion of the scope of its analysis. See NPRM 

at 42035–36. 

509U.S. Census Bureau, ‘‘All Sectors: County 

Business Patterns, Including ZIP Code Business 

Patterns, by Legal Form of Organization and 

Employment Size Class for the U.S., States, and 

Selected Geographies: 2021,’’ https://

data.census.gov/table?q=CB2100CBP&

n=44111:44112&tid=CBP2021.

CB2100CBP&nkd=EMPSZES∼001,LFO∼001 (listing 

21,622 establishments for ‘‘[n]ew car dealers,’’ 

NAICS code 44111, and 25,649 establishments for 

‘‘[u]sed car dealers,’’ NAICS code 44112). 

510See SBP VI.A.2. 

511NPRM at 42035; see also id. at 42033–34 

(describing recordkeeping requirements and 

analyzing cost burden). To avoid duplicative or 

unnecessary analysis, the information required by 

the IRFA can be provided with or as part of any 

other analysis required by any other law. 5 U.S.C. 

605(a). 

512See NPRM at 42027, 42035 (enumerating 

records to be retained and time period for 

retention). 

513See 5 U.S.C. 603(c)(1)–(4). 

514Comment of SBA Advocacy, Doc. No. FTC– 

2022–0046–6664. 

515Off. of Advoc., U.S. Small Bus. Admin., ‘‘A 

Guide for Government Agencies: How to Comply 

with the Regulatory Flexibility Act’’ 39 (2017), 

https://advocacy.sba.gov/wp-content/uploads/ 

2019/06/How-to-Comply-with-the-RFA.pdf. 

consumer complaints represent the ‘‘tip 

of the iceberg’’ of actual misconduct, as 

many unlawful practices go undetected 

or unreported by consumers. Further, 

the Commission has taken significant 

action aimed at addressing law 

violations in the motor vehicle dealer 

marketplace, despite limited resources 

and a broad mandate to address 

unlawful practices across much of the 

nation’s commercial activity,505 and, 

particularly given the Supreme Court’s 

2021 ruling limiting the FTC’s ability to 

obtain redress for consumers, it is 

difficult to get full redress for 

consumers.506 Despite these 

Commission actions, as well as the 

hundreds of additional actions brought 

by other Federal and State regulators, 

the deceptive or unfair acts or practices 

addressed by the proposed rule persist. 

(b) Succinct Statement of the Objectives 

of, and Legal Basis for, the Proposed 

Rule 

The objectives of the Rule and its 

legal basis, including the specific grant 

of rulemaking authority under section 

1029 of the Dodd-Frank Act, 12 U.S.C. 

5519, were set forth in the IRFA.507 The 

objectives and legal basis, and 

comments on these topics, additionally 

have been discussed throughout this 

SBP. 

(c) Description of and, Where Feasible, 

Estimate of the Number of Small 

Entities to Which the Proposed Rule 

Will Apply 

In its IRFA, the Commission 

estimated that there were approximately 

46,525 franchise, new motor vehicle, 

and independent/used motor vehicle 

dealers.508 As discussed in the 

Paperwork Reduction Act analysis in 

SBP III.V, the Commission received 

comments from SBA Advocacy and 

others on this estimate, and the 

Commission has responded to those 

comments by making certain changes to 

the proposal in light of the comments 

received. The Commission has revised 

its estimate of covered dealers to 47,271 

franchise, new motor vehicle, and 

independent/used motor vehicle dealers 

based on newly available NAICS data 

assembled by the U.S. Census 

Bureau.509

Regarding the estimate of the number 

of small entities affected by the Final 

Rule, as noted in the Certification of the 

Final Rule,510 while the Commission 

cannot determine the precise number of 

small entities, the data the Commission 

does have reinforce the Commission’s 

initial view that most covered entities 

are small entities. 

(d) Description of the Projected 

Reporting, Recordkeeping, and Other 

Compliance Requirements of the 

Proposed Rule 

An industry association commenter 

argued that the Commission did not 

‘‘accurately’’ lay out the proposed rule’s 

projected requirements. The commenter 

did not provide an explanation of what 

it alleged to be inaccurate in the 

Commission’s description. This 

comment notwithstanding, the NPRM 

described the proposed rule’s projected 

requirements, including by elaborating 

on the proposed recordkeeping 

requirements and providing estimates 

regarding the anticipated recordkeeping 

time and resource obligations for 

programmers, clerical staff, sales 

managers, and compliance officers.511

The NPRM also provided a detailed 

description of the recordkeeping 

requirements for entities to be covered 

by the Rule.512

(e) Duplicative, Overlapping, or 

Conflicting Federal Rules 

An industry association commenter 

argued that the Commission failed to 

identify relevant Federal rules that may 

duplicate, overlap, or conflict with the 

proposal. This commenter’s arguments 

that the proposed rule conflicts with 

Federal statutes are addressed in the 

section-by-section analysis in SBP III. 

Commenters provided no examples of 

actual conflicts between the proposals 

and Federal law. Further, there is no 

evidence that duplicative laws 

prohibiting misrepresentations or unfair 

acts or practices have harmed 

consumers or competition. Moreover, 

the additional remedies provided by the 

Final Rule will benefit consumers who 

encounter conduct that is already illegal 

and will assist law-abiding dealers that 

presently lose business to competitors 

that act unlawfully. 

(f) Description of Any Significant 

Alternatives to the Proposed Rule 

Which Accomplish the Stated 

Objectives of Applicable Statutes and 

Which Minimize Any Significant 

Economic Impact of the Proposed Rule 

on Small Entities 

Statutory examples of ‘‘significant 

alternatives’’ include different 

requirements or timetables that take into 

account the resources available to small 

entities; the clarification, consolidation, 

or simplification of compliance and 

reporting requirements under the Rule 

for small entities; the use of 

performance rather than design 

standards; and an exemption from 

coverage of the Rule, or any part thereof, 

for small entities.513 Comments from 

SBA Advocacy and from a national 

industry association argued that the 

Commission did not set forth 

alternatives to the proposed rule.514

In its Regulatory Flexibility Act 

compliance guidance to Federal 

agencies, the SBA Office of Advocacy 

provides that, ‘‘[i]f an agency is unable 

to analyze small business alternatives 

separately, then alternatives that reduce 

the impact for businesses of all sizes 

must be considered.’’ 515 As the 


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516NPRM at 42036–37; see also id. at 42029–30 

(indicating, in Questions for Comment 26.b, 28.a, & 

30 that the Commission was considering alternative 

approaches). 

517See Comment of SBA Advocacy, Doc. No. 

FTC–2022–0046–6664 at 4–6. As addressed in SBP 

III.C.2(a) and SBP III.E.2(c), in responding to a 

similar comment by financial institutions, the Final 

Rule does not change the status quo regarding the 

responsibilities of contract assignees or other 

subsequent holders of motor vehicle financing 

under the Holder Rule, and the Commission 

declines to create a safe harbor for contract 

assignees where it did not previously exist. 

Similarly, one comment recommended that the 

Commission add a rule provision authorizing an 

alternative compliance mechanism, stating that 

such a provision would aid not just smaller entities 

but larger entities as well. Under this alternative 

mechanism, independent accountability 

organizations could apply to the Commission for 

authorization to review and assess auto dealers’ 

adherence to a set of rule compliance guidelines 

that would be created. See Comment of BBB Nat’l 

Programs, Doc. No. FTC–2022–0046–8452 at 1–3. 

This comment suggested that such an alternative 

compliance mechanism would have several 

benefits, including educating industry participants 

and allowing for industry oversight beyond the 

capacity of the FTC. The Commission agrees with 

the goals of educating stakeholders and maximizing 

resources used to ensure compliance with the Rule 

but notes that these goals can be furthered without 

adding alternate mechanisms with as-yet unknown 

guidelines, that may or may not be sufficient to 

protect consumers, to the Rule that the Commission 

is finalizing. The Commission notes that the Rule 

finalizes certain baseline protections that should 

already be in place under the law. The Commission 

encourages stakeholders, such as auto dealer trade 

associations, BBB, and others, to educate their 

members and the public about the Rule and 

encourage compliance, as such groups have done 

when issuing guidance on other aspects of the law. 

518Comment of SBA Advocacy, Doc. No. FTC– 

2022–0046–6664 at 5–6; see generally Comment of 

Nat’l Auto. Dealers Ass’n, Doc. No. FTC–2022– 

0046–8368. The National Automobile Dealers 

Association also argues that the Commission should 

have considered whether to do a rule in the first 

instance. The NPRM provides a detailed 

explanation of why, more than a decade after 

Congress granted the FTC APA rulemaking 

authority with respect to motor vehicle dealers, and 

continued enforcement, outreach, and other 

initiatives, a rule is needed to address ongoing 

problems related to bait-and-switch tactics and 

hidden charges. 

519Separately, the Commission notes that the 

NPRM identified and solicited comments on 

alternatives to every substantive requirement, 

including the areas specifically addressed by the 

commenters. See, e.g., NPRM at 42028–30 (Q4–7, 

Q10, Q16, Q28, Q33, Q36–38); id. at 42040–41. 

520 5 U.S.C. 604(a)(1)-(6). 

Commission explained in its NPRM, it 

‘‘envisioned and drafted this Rule 

mindful that most motor vehicle dealers 

are small entities,’’ and drafted its 

proposal in the first instance to 

minimize economic impact on all motor 

vehicle dealers.516 For example, the 

Rule prohibits conduct that already 

violates the FTC Act, but still takes 

steps to minimize burdens for dealers of 

all sizes, by, for example, allowing 

records to be kept in any legible form 

already kept in the ordinary course of 

business, and by limiting recordkeeping 

requirements to twenty-four months 

from the date the record is created 

despite the fact that motor vehicle 

financing terms are generally years 

longer than this period. Commenters 

generally appear to understand the 

relevant market in a similar manner. For 

instance, the possible alternatives raised 

by the comment from SBA Advocacy 

would apply uniformly to both large 

and small businesses. These alternatives 

included excluding vehicle dealers that 

do not sell automobiles, regardless of 

the size of the dealer, and creating a 

carve-out for banks and other financing 

companies that would cover multibillion dollar institutions.517 Comments 

from SBA Advocacy and a national 

industry association also discussed the 

proposed rule’s disclosure requirements 

in an industry-wide manner, not 

limiting their comments to businesses 

under any particular size threshold.518

Nevertheless, the Commission has 

reviewed these comments carefully, has 

responded to comments on alternatives 

in the corresponding sections of its 

section-by-section analysis, and has 

determined to modify the definition of 

‘‘Covered Motor Vehicle’’ at § 463.2(e) 

and not to finalize the requirements 

proposed in §§ 463.4(b) and 463.5(b).519

2. Final Regulatory Flexibility Analysis 

Although the Commission is 

certifying that the Rule will not have a 

significant economic impact on a 

substantial number of small entities, the 

Commission has prepared the following 

FRFA with this Final Rule. In the 

following paragraphs, the Commission 

provides the information required for a 

FRFA: (1) a statement of the need for, 

and objectives of, the Rule; (2) a 

statement of the significant issues raised 

by public comments in response to the 

IRFA, including any comments filed by 

the Chief Counsel for Advocacy of the 

Small Business Administration in 

response to the proposed rule, the 

Commission’s assessment and response, 

and any resulting changes; (3) a 

description of and an estimate of the 

number of small entities to which the 

Rule will apply or an explanation of 

why no such estimate is available; (4) a 

description of the projected reporting, 

recordkeeping, and other compliance 

requirements; and (5) a description of 

the steps the agency has taken to 

minimize the significant economic 

impact on small entities consistent with 

the stated objectives of applicable 

statutes, including a discussion of any 

significant alternatives for small 

entities.520

(a) Statement of the Need for, and 

Objectives of, the Rule 

The FTC issues this Final Rule to 

address deceptive and unfair acts or 

practices during the vehicle buying or 

leasing process, and to provide an 

additional enforcement tool to remedy 

consumer harm and assist law-abiding 

dealers. As detailed in SBP II.B.1, these 

deceptive and unfair practices include 

bait-and-switch tactics, such as dealers 

advertising deceptively low prices or 

other deceptive terms to induce 

consumers to visit the dealership, and 

charging such consumers additional, 

unexpected amounts, including after the 

consumers have invested significant 

time and effort traveling to, and 

negotiating at, the dealership premises. 

At present, consumers may never learn 

that they are paying substantial 

unexpected charges, given the 

complexity and length of the motor 

vehicle sale, financing, or lease 

transaction and its attendant contracts 

and other documents. Law enforcement, 

outreach and other engagement in this 

area, as well as the number of consumer 

complaints each year regarding motor 

vehicle dealer practices, indicate that 

unlawful conduct persists despite 

Federal and State law enforcement 

efforts. 

(b) Issues Raised by Comments, 

Including Comments by the Chief 

Counsel for Advocacy of the SBA, the 

Commission’s Assessment and 

Response, and Any Changes Made as a 

Result 

The comments regarding the IRFA are 

addressed in SBP VI.B, and the 

comments regarding the other 

provisions of the NPRM are discussed in 

the SBP’s section-by-section analysis in 

SBP III. As noted, the Commission has 

made certain changes to the Rule after 

carefully reviewing the comments. 

These changes include modification of 

the definition of ‘‘Covered Motor 

Vehicle’’ at § 463.2(e), removal of the 

add-on list disclosure requirement in 

proposed § 463.4(b) and the 

requirements in proposed § 463.5(b), 

and removal of the corresponding 

recordkeeping requirements in proposed 

§ 463.6(a)(2) and (a)(4). 

(c) Description and Estimate of the 

Number of Small Entities to Which the 

Final Rule Will Apply or an Explanation 

of Why No Such Estimate Is Available 

The Final Rule applies to covered 

motor vehicle dealers, as defined in 

§ 463.2(f), of covered motor vehicles at 

§ 463.2(e): ‘‘any self-propelled vehicle 

designed for transporting persons or 

property on a public street, highway, or 


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521The Commission is authorized to prescribe 

rules with respect to a motor vehicle dealer that is 

predominantly engaged in the sale and servicing of 

motor vehicles, the leasing and servicing of motor 

vehicles, or both, as defined in 12 U.S.C. 5519(a). 

522See SBP VI.A.2. 

road,’’ and, in light of comments 

received, excludes specific categories as 

detailed in § 463.2(e).521 As explained 

in the Certification,522 the Commission 

cannot determine the precise number of 

small entities to which the Final Rule 

applies, but census data indicate that 

the vast majority of the estimated 47,271 

dealers covered by the Rule are small 

entities according to the applicable U.S. 

Small Business Administrator’s relevant 

size standards. 

(d) Description of the Projected 

Reporting, Recordkeeping, and Other 

Compliance Requirements 

The Final Rule prohibits certain 

unfair or deceptive acts or practices and 

contains recordkeeping requirements. 

The Final Rule contains no reporting 

requirements. 

The Final Rule requires covered 

motor vehicle dealers to clearly and 

conspicuously disclose the offering 

price of a vehicle in certain 

advertisements and in response to 

consumer communications. It also 

requires dealers to make certain other 

disclosures during the sale, financing, or 

leasing process. To enforce the Rule and 

prevent the unfair or deceptive practices 

prohibited by the Rule, the Rule further 

requires dealers to retain records 

necessary to demonstrate compliance 

with the Rule. Such records include 

advertising materials and copies of 

purchase orders and financing and lease 

documents. The Rule requires such 

records to be retained for a period of 

twenty-four months from the date they 

are created and provides that they may 

be kept in any legible form, and in the 

same manner, format, or place as they 

may already be kept in the ordinary 

course of business. Further details on 

these provisions are discussed 

throughout this SBP, including in the 

section-by-section analysis of the 

recordkeeping requirements in § 463.6, 

as well as in the preceding Paperwork 

Reduction Act analysis. 

(e) Description of the Steps the 

Commission Has Taken To Minimize 

the Significant Economic Impact on 

Small Entities Consistent With the 

Stated Objectives of Applicable Statutes 

The Final Rule addresses certain 

unfair or deceptive acts or practices in 

motor vehicle sales, financing, and 

leasing. In drafting its NPRM, reviewing 

public comments, and modifying the 

Rule from its original proposal, the 

Commission has taken specific steps to 

avoid unduly burdensome requirements 

for small entities. The Commission 

believes that the Final Rule—including 

the prohibitions against making specific 

misrepresentations and against charging 

consumers for any item unless the 

dealer obtains the express, informed 

consent of the consumer for the 

charge—is necessary to protect 

consumers, including small-business 

consumers that purchase, finance, or 

lease motor vehicles. By addressing 

these practices, the Rule also will 

benefit competition by preventing lawabiding dealers, many of which are 

small businesses, from losing business 

due to unlawful practices by other 

dealers. 

For each provision in the Rule, the 

Commission has attempted to reduce 

the burden on businesses, including 

small entities. For example, the 

Commission limited the number of 

disclosures that dealers are required to 

make under the Final Rule, and in 

response to comments, further limited 

such disclosures by determining not to 

finalize the disclosures in proposed 

§§ 463.4(b) and 463.5(b). Similarly, the 

Commission has limited the duration of 

the Rule’s recordkeeping requirements 

to twenty-four months from the date the 

relevant record is created, even though 

this period is far shorter than the length 

of many financing contracts. 

As previously noted, the Commission 

does not believe the Final Rule imposes 

a significant economic impact on a 

substantial number of small entities. 

Nonetheless, the Commission has taken 

care to avoid extensive requirements 

related to form. For example, the 

Commission does not specify the form 

in which records required by the Final 

Rule must be kept. Moreover, the Rule’s 

disclosure requirements do not mandate 

specific font sizes. In sum, the 

Commission has worked to minimize 

any significant economic impact on 

small businesses. 

VII. Final Regulatory Analysis Under 

Section 22 of the FTC Act 

A. Introduction 

The Federal Trade Commission (FTC) 

is finalizing a Rule to address unfair or 

deceptive acts or practices by covered 

motor vehicle dealers when engaging 

with consumers who are shopping for 

covered motor vehicles. The Rule 

contains several provisions targeted at 

addressing price-related deception and 

unfairness for consumers with respect to 

purchasing, leasing, and financing new 

and used motor vehicles. The Final Rule 

prohibits misrepresentations regarding 

material information about certain 

aspects of motor vehicles and motor 

vehicle financing. The Final Rule also 

mandates certain disclosures about 

vehicle price, payments, and add-ons, 

while prohibiting charges for add-on 

products and services that would not 

benefit the consumer or for any item 

unless the dealer obtains the express, 

informed consent of the consumer for 

the charge. 

Section 22 of the FTC Act, 15 U.S.C. 

57b–3, requires the Commission to issue 

a final regulatory analysis when 

publishing a final rule. The final 

regulatory analysis must contain (1) a 

concise statement of the need for, and 

objectives of, the final rule; (2) a 

description of any alternatives to the 

final rule which were considered by the 

Commission; (3) an analysis of the 

projected benefits, any adverse 

economic effects, and any other effects 

of the final rule; (4) an explanation of 

the reasons for the determination of the 

Commission that the final rule will 

attain its objectives in a manner 

consistent with applicable law and the 

reasons the particular alternative was 

chosen; and (5) a summary of any 

significant issues raised by the 

comments submitted during the public 

comment period in response to the 

preliminary regulatory analysis, and a 

summary of the assessment by the 

Commission of such issues. 

As discussed previously, the FTC 

issues this Final Rule to address 

deceptive and unfair acts or practices 

during the vehicle buying or leasing 

process, and to provide an additional 

enforcement tool to remedy consumer 

harm and assist law-abiding dealers. 

These deceptive and unfair practices 

include bait-and-switch tactics, such as 

dealers advertising deceptively low 

prices or other deceptive terms to 

induce consumers to visit the 

dealership; and charging such 

consumers additional, unexpected 

amounts, including after the consumers 

have invested significant time and effort 

traveling to, and negotiating at, the 

dealership premises. At present, 

consumers may never learn that they are 

paying substantial unexpected charges, 

given the complexity and length of the 

motor vehicle sale, financing, or lease 

transaction and its attendant contracts 

and other documents. Law enforcement, 

outreach, and other engagement in this 

area, as well as the number of consumer 

complaints each year regarding motor 

vehicle dealer practices, indicate that 

unlawful conduct persists despite 

Federal and State law enforcement 

efforts. 

In response to public comments, the 

Commission considered and made a 

number of revisions from the proposed 


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523These revisions and alternatives the 

Commission considered are described in detail in 

the Commission’s Statement of Basis and Purpose, 

as is the Commission’s explanation why the Final 

Rule will attain its objectives in a manner 

consistent with applicable law. 

524See Fed. Trade Comm’n, Notification of Intent 

to Request Public Comment, Regulatory Review 

Schedule, 87 FR 47947 (Aug. 5, 2022), https://

www.govinfo.gov/content/pkg/FR-2022-08-05/pdf/

2022-16863.pdf. 

525While whole calendar years are used here for 

ease of reference, this analysis estimates costs and 

benefits over a ten-year period running from the 

Rule’s effective date. For the purposes of 

discounting, the Commission assumes that any 

upfront costs or benefits occur immediately upon 

the effective date of the Rule and are therefore not 

discounted. The Commission further assumes that 

ongoing costs and benefits occur at the end of each 

period, such that even ongoing costs/benefits that 

occur in year 1 are discounted. 

rule, which in turn have necessitated 

revisions to the regulatory analysis, 

resulting in this final regulatory 

analysis.523 The most significant 

revisions to the proposed rule impacting 

the regulatory analysis are the removal 

of proposed §§ 463.4(b) (requiring the 

disclosure of add-on lists) and 463.5(b) 

(requiring various itemized disclosures 

relating to undisclosed or unselected 

add-ons). As a result of the 

Commission’s determination not to 

finalize these sections of the proposed 

rule, costs and benefits associated with 

those provisions have been excluded 

from the final regulatory analysis. The 

Commission also has made revisions in 

response to public comments, the 

availability of newer data, the 

identification of additional relevant 

data, and the application of newer 

scholarly research. The final regulatory 

analysis thus builds upon the 

preliminary regulatory analysis, while 

incorporating several updates: 

• The analysis of consumer time 

savings has been revised in response to 

public comments and changes following 

the NPRM. 

• A section quantifying the reduction 

in deadweight loss resulting from the 

Rule has been added, based upon recent 

research that allows the Commission to 

quantify both how dealer markups will 

respond to price transparency and how 

new and used vehicle quantities will 

respond to changes in price. 

• Training costs have been added for 

some provisions in response to public 

comments. 

• Information systems costs have 

been added to the Recordkeeping 

section in response to public comments, 

based on estimates of how much data 

would be required and the cost of cloud 

or on-premises data storage. 

• Wages used to monetize labor costs 

have been updated to reflect new data 

from the Bureau of Labor Statistics. 

• The number of dealers has been 

updated to reflect new data from Census 

County Business Patterns. 

• The number of transactions subject 

to the Rule has been revised in response 

to public comments, and the 

Commission’s identification of 

additional data sources that can be used 

to exclude private party and fleet 

transactions. 

The Final Rule contains requirements 

in the following areas: 

1. Prohibited misrepresentations; 

2. Required disclosure of offering 

price in certain advertisements and in 

response to inquiry; 

3. Required disclosure of total of 

payments for financing and leasing 

transactions; 

4. Prohibition on charging for add-ons 

in certain circumstances; 

5. Requirement to obtain express, 

informed consent before any charges; 

and 

6. Recordkeeping. 

In the following analysis, we describe 

the anticipated impacts of the Final 

Rule. Where possible, we quantify the 

benefits and costs and present them 

separately by provision. If a benefit or 

cost is quantified, we indicate the 

sources of the data relied upon. If an 

assumption is needed, the text makes 

clear which quantities are being 

assumed. 

A period of 10 years is used in the 

baseline scenario because FTC rules are 

generally subject to review every 10 

years.524 Quantifiable aggregate benefits 

and costs across three different sets of 

assumptions are summarized as the net 

present value over this 10-year time 

frame in Table 1.1. Quantifiable benefits 

include time savings from a more 

efficient shopping and sales process and 

a reduction in deadweight loss, both of 

which ultimately result from greater 

transparency under the Rule. 

Quantifiable costs primarily reflect the 

resources expended by automobile 

dealers in developing the systems 

necessary to comply with the provisions 

of the Rule. In addition, we expect 

additional benefits and costs that we are 

presently unable to quantify. Among the 

unquantified benefits are time savings 

that accrue to individuals who abandon 

vehicle transactions entirely; additional 

time savings on activities that 

individuals engage in digitally under 

the status quo; reductions in deadweight 

loss resulting from direct price effects in 

the markets for used vehicles or vehicle 

add-ons; and the benefit of reduced 

stress, discomfort, and unpleasantness 

experienced by motor vehicle 

consumers under the status quo. Among 

the unquantified costs would be any 

potential reductions in consumer 

information resulting from changes in 

dealers’ policies regarding marketing 

and advertisements. The discount rate 

reflects society’s preference for 

receiving benefits earlier rather than 

later; a higher discount rate is associated 

with a greater preference for benefits in 

the present. The present value is 

obtained by multiplying each year’s net 

benefit by a discount factor a number of 

times equal to the number of years in 

the future the net benefit accrues.525

TABLE 1.1—PRESENT VALUE OF NET BENEFITS (IN MILLIONS), 2024–2033 

Low estimate Base case High estimate 

3% Discount 

rate 

7% Discount 

rate 

3% Discount 

rate 

7% Discount 

rate 

3% Discount 

rate 

7% Discount 

rate 

Benefits: 

Time Savings .................................... $7,463 $6,145 $14,926 $12,290 $24,036 $19,790 

Deadweight Loss Reduction ............. 568 468 1,298 1,069 2,307 1,899 

Total Benefits ............................. 8,031 6,613 16,224 13,359 26,343 21,690 

Costs: 

Finance/Lease Total of Payments 

Disclosure ...................................... 296 246 296 246 117 98 

Offering Price Disclosure .................. 46 46 46 46 0 0 

Prohibition re: Certain Add-ons & 

Express, Informed Consent .......... 475 406 475 406 147 128 


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526See SBP II.B–C. 

527NPRM at 42037 & n.180. 

528Comment of Am. for Fin. Reform et al., Doc. 

No. FTC–2022–0046–7607. 

TABLE 1.1—PRESENT VALUE OF NET BENEFITS (IN MILLIONS), 2024–2033—Continued 

Low estimate Base case High estimate 

3% Discount 

rate 

7% Discount 

rate 

3% Discount 

rate 

7% Discount 

rate 

3% Discount 

rate 

7% Discount 

rate 

Prohibition on Misrepresentations .... 157 130 157 130 0 0 

Recordkeeping .................................. 296 248 296 248 296 248 

Total Costs ................................ 1,270 1,075 1,270 1,075 559 474 

Net Benefits ............................... 6,761 5,538 14,954 12,284 25,784 21,216 

Note: ‘‘Low Estimate’’ reflects all lowest benefit estimates and high cost scenarios and ‘‘High Estimate’’ reflects all highest benefit estimates 

and low cost scenarios. ‘‘Base Case’’ reflects base case benefit estimates and high cost scenarios. Not all impacts can be quantified; estimates 

only reflect quantified costs and benefits. 

B. Estimated Benefits of Final Rule 

In this section, we describe the 

beneficial impacts of the Rule, by (1) 

providing quantitative estimates where 

possible, (2) identifying quantitative 

benefits that cannot be estimated at this 

time due to a lack of data, and (3) 

describing benefits that can only be 

assessed qualitatively. The benefits cut 

across multiple areas addressed by the 

Rule and these benefits are impossible 

to identify separately by area. As a 

result, we enumerate the benefits of the 

Rule not by provision, but by category. 

1. Consumer Time Savings When 

Shopping for Motor Vehicles 

Several provisions of the Rule would 

benefit consumers by saving them time 

as they complete motor vehicle 

transactions. Required disclosures of 

relevant prices and prohibitions of 

misrepresentations, inter alia, would 

save consumers time when shopping for 

a vehicle by requiring the provision of 

salient, material information early in the 

process and eliminating time spent 

pursuing misleading offers. The 

Commission’s enforcement record 

shows that consumer search and 

shopping is sometimes influenced by 

unfair or deceptive advertising that 

draws consumers to a dealership in 

pursuit of an advertised deal, only to 

find out at some point later in the 

process (if at all) that the advertised deal 

is not actually available to them.526 This 

bait-and-switch advertising has the 

effect of wasting consumers’ time 

traveling to and negotiating with 

unscrupulous dealerships, time which 

would otherwise be spent pursuing 

truthful offers in the absence of 

deception and unfairness. If consumers 

are faced with hard constraints on their 

time or other resources, this wasted time 

may mean that they are unable to find 

the deal that best fits their needs and 

preferences. Additionally, motor vehicle 

consumers frequently begin the process 

of shopping for a motor vehicle (e.g., by 

visiting a dealership in response to an 

ad or initiating negotiations in response 

to a quoted price that is incomplete) and 

then later abandon the nascent 

transaction entirely when additional 

information is revealed. In these 

instances, consumers do not purchase or 

lease a vehicle at all. The Rule would 

also save consumers time by avoiding 

these abandoned transactions. However, 

because the Commission has been 

unable to identify data to determine the 

quantity of such abandoned transactions 

and the amount of time spent pursuing 

them, this benefit remains unquantified 

in the analysis. 

Obviously, many consumers end up 

purchasing and leasing vehicles under 

the status quo—either because full 

revelation of prices and terms still 

results in a mutually beneficial 

transaction or because full revelation 

never occurs and consumers are 

deceived into completing a transaction 

that is not mutually beneficial. These 

consumers also spend additional, 

unnecessary time discovering 

information that dealers would be 

required to disclose earlier once the 

Rule is in effect. The Commission 

expects the Rule’s required disclosures 

and prohibitions against 

misrepresentations to improve 

information flows and consumer search 

efficiency, including but not limited to, 

addressing the influence of deception 

and unfairness on consumer search and 

shopping behavior. 

The Commission’s preliminary 

analysis estimated that the proposed 

rule would allow consumers to spend 3 

fewer hours completing each motor 

vehicle transaction and result in 

(quantifiable) overall time savings 

valued at between $30 billion and $35 

billion. In this final regulatory analysis, 

the Commission takes into account the 

effects of revisions to the proposed rule 

and additional data, addresses industry 

comments, and employs an alternative 

analytical approach with a sensitivity 

analysis. This sensitivity analysis 

reflects a ‘‘high-end’’ estimate that 

consumers will save as many as 3.3 

hours per completed transaction; a 

‘‘base case’’ estimate—representing the 

most likely scenario—that consumers 

will save 2.05 hours per transaction; and 

a possible ‘‘low-end’’ savings estimate of 

1.02 hours. Using a 7% discount rate, 

these time savings estimates result in a 

range of between $6.1 billion and $19.8 

billion in total savings, with a base case 

of $12.3 billion. 

In its preliminary analysis, the 

Commission relied on results from the 

2020 Cox Automotive Car Buyer Journey 

study, which showed that consumers 

spent roughly 15 hours researching, 

shopping, and visiting dealerships for 

each motor vehicle transaction.527 Based 

on the proposed rule provisions 

prohibiting misrepresentations and 

requiring price transparency, the 

Commission assumed each consumer 

who consummated a vehicle transaction 

would spend 3 fewer hours shopping 

online, corresponding with dealerships, 

visiting dealer locations, and negotiating 

with dealer employees. The 3 hours 

corresponded to 20% of an average 

consumer’s time spent on such activities 

in 2019 (pre-COVID). 

The Commission received a number 

of comments emphasizing the 

unnecessary time consumers must 

spend to ascertain the price and terms 

when attempting to consummate a 

vehicle transaction. One group of 

commenters, for example, asserted that 

‘‘[t]he most important factor for 

consumers purchasing a vehicle is its 

price, yet the price is almost impossible 

to ascertain without spending hours at 

the dealership.’’ 528 Another group of 

commenters provided a compilation of 

numerous consumer complaints, 

including many that described 

consumers spending hours at a 


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529Comment of Consumer Reps. et al., Doc. No. 

FTC–2022–0046–7520 at 3, 11, 12, 16, 38 (including 

story from Illinois consumer describing ‘‘[spending] 

about 4 hours at the dealership while the salesman 

kept changing the terms of the deal . . . .’’; story 

from Connecticut consumer describing how, ‘‘[a]fter 

nearly three hours of paperwork . . . I was finally 

presented with the official bill to pay the balance. 

The price was now higher than the original adjusted 

sticker.’’; story from New Jersey consumer 

describing how, ‘‘[a]fter 4 hours of negotiations . . . 

I finally got nearly the same price as the verified 

offer [for the vehicle] but about $1000 less on my 

trade-in[ ] (that was also part of the verified offer). 

The [dealer] also added on Accessories ‘other 

products’ [of] $474.00 . . . .’’; story from Texas 

consumer describing how ‘‘[t]he [dealership] 

finance manager kept me there for two hours, and 

said the deal was done. I went to get my wife, when 

we got back the price had gone up $3,000.00.’’). 

530 2020 Cox Automotive Car Buyer Journey, 

supra note 25, at 1. 

531See 2021 Cox Automotive Car Buyer Journey 

Study, supra note 504, at 16. 532See 2022 Car Buyer Journey, supra note 25, at 

6. 533 Interestingly, consumer satisfaction with the 

car buying process, as measured by this same 

survey, was highest during the COVID–19 

pandemic when the time spent on research, 

shopping, and visiting dealerships was lowest, and 

has since dropped back to pre-pandemic levels. 

2022 Car Buyer Journey, supra note 25, at 5. 

534When the transaction volume from the 

preliminary analysis is applied to the Commission’s 

current methodology and sensitivity analysis, time 

savings under the Final Rule ranges from a high-end 

of $35 billion to a low-end of $11 billion, with a 

base case of $22 billion (assuming a 7% discount 

rate). In comparison, the preliminary analysis 

computed savings under the proposed rule as 

approximately $31 billion (also assuming a 7% 

discount rate). The residual difference in base case 

savings is attributable to less time saved per 

transaction—partially explained by additional 

provisions in the NPRM that the Commission is not 

finalizing—as well as updates to the underlying 

wages used to monetize the consumer time savings. 

535This same organization commissioned a study 

that was recently released asserting the proposed 

rule would lead to an increase in consumer 

transaction time. This survey, however, had 

numerous methodological shortcomings rendering 

its results unreliable. For example, the survey 

presented each respondent at the outset with a 

leading statement telling them the rule would 

impose ‘‘new duties [that] are expected to create 

additional monitoring, training, forms, and 

compliance review responsibilities as well as a 

modification of record keeping systems and 

coordination with outside IT and other vendors’’ 

and ‘‘increase the time of a motor vehicle 

transaction, inhibit online sales, limit price 

disclosures, and increase customer confusion and 

frustration.’’ Edgar Faler et al., Ctr. for Auto. Rsch., 

‘‘Assessment of Costs Associated with the 

Implementation of the Federal Trade Commission 

Notice of Proposed Rulemaking (RIN 2022–14214), 

CFR part 463’’ 34–36 (2023), https://

www.cargroup.org/wp-content/uploads/2023/05/ 

CAR-Report_CFR-Part-463_Final_May-2023.pdf 

(introductory instructions on the survey instrument 

sent to respondents). Moreover, the survey started 

with a sample size of 60 dealers (id. at 7) in an 

industry with an estimated 46,525 dealers, NPRM 

at 42,031 & n.154, but only 40 dealers actually 

completed responses to many key questions (id. at 

29). The survey does not describe how these 40– 

60 dealers were chosen. Although the survey 

estimates that the proposed rule would require 

consumers to spend additional time on motor 

vehicle transactions, this conclusion is based on the 

responses of just 40 dealers and included no 

consumers. Id. at 29–32. Moreover, the survey 

report attributed much of this estimated increase to 

Continued 

dealership trying to ascertain the final 

price and terms of the transaction.529

The improved information flow under 

the Final Rule will provide quantifiable 

benefits for consumers by reducing or 

eliminating this unnecessary need to 

spend time penetrating opaque pricing 

and terms, and will provide qualitative 

benefits by reducing frustration and 

stress in the car buying process. 

Some industry commenters 

questioned the appropriateness of the 

data and assumptions used to quantify 

the time savings benefit. A number of 

industry association commenters argued 

that the 15-hour figure did not represent 

a reasonable base from which time 

savings attributable to the Rule could be 

derived. One such commenter criticism 

asserted that the publication from which 

it was sourced only surveyed consumers 

who used the internet during research 

and shopping and therefore could not be 

representative of the time spent by 

consumers who do not use the internet. 

Still other commenters noted that 

additional data from the same 

organization were available. The 

Commission disagrees that the 15-hour 

estimate is an unreasonable base from 

which to derive time savings from the 

Rule. While the Cox Automotive Study 

acknowledges only internet users were 

surveyed, the study also indicates its 

‘‘[r]esults are weighted to be 

representative of the buyer 

population.’’ 530 Also, while more recent 

data were available at the time of the 

analysis for the NPRM, those data were 

from an extraordinary period (the 

COVID–19 pandemic). The Commission 

expects that the data used for the 

preliminary analysis are more 

representative of consumer experiences 

over the analysis window than the more 

recent data. While not dispositive, the 

limited data available since the NPRM 

was published bears this hypothesis out. 

In the 2021 Cox Automotive Car Buyer 

Journey Study, consumers spent roughly 

12-and-a-half hours researching, 

shopping, and visiting dealerships for 

each motor vehicle transaction.531 In 

contrast, in the 2022 Car Buyer Journey 

study, consumers spent roughly 14-anda-half hours researching, shopping, and 

visiting dealerships for each motor 

vehicle transaction.532 This admittedly 

short trend suggests that the COVID–19 

pandemic had a significant effect on 

motor vehicle shopping, reducing the 

amount of time the typical consumer 

spent on these activities, and that time 

spent on these activities has already 

rebounded to previous levels.533

Another industry association 

commenter suggested that the figure 

included categories of time use that 

could not conceivably be affected by the 

proposed rule, such as online research 

into vehicle features, and that attention 

should be restricted to time spent 

shopping. The Commission finds that 

several provisions in the Rule clearly 

have the potential to reduce time spent 

across most categories covered by the 

15-hour figure, including the largest 

category (‘‘Researching and Shopping 

Online’’). This category of time use 

would include comparing listed vehicle 

prices across dealerships that, under the 

Rule, would be transparent and 

comparable in a way that they were not 

in the status quo, thus saving consumers 

time. 

Some commenters also noted that the 

total base of transactions reported in the 

preliminary analysis appeared to 

overstate the number of transactions to 

which the proposed rule would apply. 

First, commenters asserted that the 62.1 

million transactions double-counted 

new vehicle leases in the data source 

from which it was obtained (2019 

National Transportation Statistics, Table 

1–17). Second, commenters asserted 

that the number included private party 

transactions that would be entirely 

unaffected by the proposed rule. 

Finally, commenters argued that the 

transactions number contained 

wholesale and fleet transactions, where 

the amount of time spent researching, 

shopping, and visiting dealers is likely 

to be substantially different relative to a 

household consumer. 

The Commission has verified that the 

source data were revised to fix the 

erroneous double-counting of leases 

between the time they were accessed by 

the Commission for the drafting of the 

preliminary analysis and the time that 

comments were received. The final 

analysis uses the revised data. In 

addition, in response to comments that 

private party transactions should be 

excluded from the analysis, the 

Commission is revising its analysis. 

Additional data would be necessary to 

quantify any time savings benefits for 

wholesale and fleet transactions. 

Accordingly, the Commission has 

excluded all transactions occurring 

through non-retail channels from the 

final analysis.534

A number of comments raised 

concerns about the foundations of the 3- 

hour time-savings assumption. One 

industry organization noted that the Cox 

Automotive study cited in the NPRM 

does not itself address the proposals in 

the NPRM (which the survey, of course, 

predated) and does not estimate time 

savings.535 Another organization 


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proposed rule provisions that are not in the Final 

Rule. Id. at 25. 

536 In fact, the sensitivity analysis in Table 2.3 of 

this final regulatory analysis presents a range of 

reasonable estimates for time savings that includes 

the 3-hour time-saving assumption from the 

preliminary analysis in the NPRM. 

537Cox Auto. et al., ‘‘Car Buyer Journey 2019’’ 

(2019) [hereinafter Car Buyer Journey 2019], https:// 

www.coxautoinc.com/wp-content/uploads/2019/06/ 

2019-Car-Buyer-Journey-Study-FINAL-6-11-19.pdf. 

While Cox Automotive has released subsequent Car 

Buyer Journey studies, none of these subsequent 

studies quantify time savings from shopping 

digitally. In addition, to the extent that shoppers 

compensate by spending more time at home on 

these activities, these time savings should be 

reduced to reflect net time savings from performing 

these activities digitally. We believe that the nature 

of performing these activities digitally vs. at the 

dealership suggests these offsets should be small. 538The 2020 Cox Automotive Digitization of Endto-End Retail study reports the fraction of 

consumers who are already engaging in various 

activities online under the status quo. Cox Auto., 

‘‘Digitization of End-to-End Retail’’ (2021) 

[hereinafter Digitization of End-to-End Retail], 

https://www.coxautoinc.com/wp-content/uploads/ 

2021/01/2020-Digitization-of-End-to-End-RetailStudy-FINAL.pdf. While the activities listed across 

studies do not match perfectly, we map the activity 

categories to the closest corresponding activity in 

the other study and, in our final analysis, exclude 

from the time savings calculation the percentage of 

transactions corresponding to the fraction of 

consumers already engaging in that activity online. 

While it is likely that consumers shopping digitally 

under the status quo will also experience some 

additional time savings under the Rule, there is 

insufficient data to estimate this marginal savings 

and so we leave this benefit unquantified in the 

analysis. 

539 2020 Cox Automotive Car Buyer Journey, 

supra note 25, at 15 (noting an average of 2.2 

dealerships visited among new car buyers). 

540Shoppers who negotiate purchase price 

digitally under the status quo will likely also obtain 

time savings from mandatory offering price 

disclosures, corresponding to the time and effort 

they put into contacting and exchanging email with 

dealerships. We lack sufficient data on the time 

spent on these activities to quantify these benefits, 

however. 

541See §§ 463.3(a), (b), and (f); 463.4(c); and 

463.5(a) and (c). The Commission notes that time 

savings would likely be higher in this category had 

it determined to finalize proposed § 463.4(b), which 

would have required disclosure of an add-on list. 

expressed confusion as to whether the 

assumption was intended as a flat 3- 

hour time savings or a 20% time 

savings, asserting that dynamism in 

automotive retailing will likely lead to 

evolution in the total amount of time 

spent shopping. 

While the Commission believes its 3- 

hour time-saving assumption in the 

NPRM remains reasonable, the 

Commission has conducted additional 

analyses, the results of which 

demonstrate the positive net benefits of 

the Rule even when applying more 

conservative assumptions around time 

savings and adjusting for the removal of 

certain proposed provisions from the 

NPRM.536 Using recent figures from Cox 

Automotive’s Car Buyer Journey 2019 

study, the Commission notes that 

consumers who do various activities in 

the vehicle buying process digitally 

(‘‘digital consumers’’) save time at the 

dealership relative to those who do not 

(‘‘non-digital consumers’’).537 The 

Commission’s revised base case time 

savings calculation assumes that only 

the fraction of consumers who are not 

currently shopping digitally will 

experience time savings, and that these 

savings will be proportional to the time 

savings found in the Car Buyer Journey 

2019 study for digital consumers.538

Because the Commission expects the 

provisions of the Rule to emulate some 

of the time-saving features of 

completing these activities digitally, the 

time savings benefits of the Rule are 

assumed to be a proportion of the time 

saved by status quo digital consumers, 

with the proportion determined by how 

closely the status quo digital shopping 

experience is expected to resemble the 

shopping experience for all consumers 

once the Rule is in effect. Additionally, 

because these numbers only reflect time 

saved at the dealership of purchase, we 

assume that these same consumers will 

also save time on these activities to the 

extent that they are initiated at 

dealerships visited prior to the 

dealership at which they purchase 

(‘‘non-purchase dealerships’’). Based on 

2020 data from Cox Automotive, the 

average consumer visits 1 non-purchase 

dealership for each transaction.539 Table 

2.1 documents both the fraction of 

consumers performing activities 

digitally under the status quo and the 

time saved at the dealership by these 

consumers on each activity. 

TABLE 2.1—COMPLETING ACTIVITIES DIGITALLY

Activity 

% of Consumers 

digital 

(2020 

digitization) 

Time saved at 

dealership 

(2019 journey) 

(minutes) 

Negotiating the Purchase Price ................................................................................................................... 20 43 

Select F&I Add-Ons ..................................................................................................................................... 18 33 

Discussing and Signing Paperwork ............................................................................................................. 13 45 

Get a Trade-In Offer .................................................................................................................................... 31 26 

Source: Car Buyer Journey 2019 and Digitization of End-to-End Retail. 

Based on the description of these 

activities and the anticipated effects of 

the Rule, our base case estimates assume 

that non-digital consumers will save an 

amount of time negotiating a vehicle 

purchase price equal to the amount of 

time saved by those negotiating 

purchase price digitally under the status 

quo (43 minutes). For non-digital 

consumers, it is currently timeconsuming to obtain comparable price 

quotes from dealerships. Many 

dealerships will not initiate price 

negotiations in earnest without a 

competing price quote in writing, which 

can only be obtained by visiting a 

dealership for the non-digital consumer. 

Mandating offering price disclosures— 

which are comparable across 

dealerships by definition—early in the 

shopping process will emulate the price 

discovery function of negotiating prices 

online, in which comparable price 

quotes can be obtained (with effort) via 

email.540

The Commission anticipates that the 

impact of the Rule on time spent 

selecting F&I add-ons and discussing 

and signing paperwork will be 

moderate. In our base case estimates, 

non-digital consumers will save an 

amount of time doing these activities 

equal to the half the amount of time 

saved by those doing these activities 

digitally under the status quo (33 × 0.5 

= 16.5 minutes and 45 × 0.5 = 22.5 

minutes, respectively). Time saved 

selecting add-ons flows primarily from 

the prohibitions on various 

misrepresentations, the mandatory 

disclosures regarding whether add-ons 

are required, and the prohibition on 

charging for add-ons under certain 

circumstances.541 Time saved 

discussing and signing paperwork also 

flows from the prohibitions on various 

misrepresentations, several disclosures 

mandated by the Rule, and the 


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542See §§ 463.3; 463.4(c), (d), and (e); and 

§ 463.5(c). 

543Again, status quo digital shoppers will likely 

obtain time savings on these activities as well, to 

the extent that their paperwork will also be less 

likely to require close scrutiny and revisions. We 

lack sufficient data on the time spent on these 

activities to quantify these benefits, however. 

544See §§ 463.3(i) and (j); 463.4(d). 

545See Progressive, ‘‘Consumers embrace online 

car buying,’’ http://www.progressive.com/resources/ 

insights/online-car-buying-trends/ (last visited Dec. 

5, 2023). 

546See 2021 Cox Automotive Car Buyer Journey 

Study, supra note 504, at 16 (noting total time of 

2:09 spent ‘‘Visiting Other Dealerships/Sellers’’ and 

total time of 2:37 spent ‘‘With the Dealership/Seller 

Where Purchased’’). 

547See U.S. Dep’t. of Transp., Off. of the Sec’y of 

Transp., Bureau of Transp. Stat., ‘‘National 

Transportation Statistics 2021, 50th Anniversary 

Edition’’ 21 (2021), https://www.bts.dot.gov/sites/ 

bts.dot.gov/files/2021-12/NTS-50th-complete-11-30- 

2021.pdf (Table 1–17). 

548See Edmunds, ‘‘Automotive Industry Trends 

2020’’ 7 (2020), https://static.ed.edmundsmedia.com/unversioned/img/industry-center/ 

insights/2020-automotive-trends.pdf. 

549See Auto. News, ‘‘Used-vehicle volume hits 

lowest mark in nearly a decade’’ (Jan. 13, 2023), 

https://www.autonews.com/used-cars/used-carvolume-hits-lowest-mark-nearly-decade (estimating 

19,100,000 of used vehicle sales in the year 2022 

occurred within the retail channel). The same 

Automotive News source reports a total used 

vehicle sales number of approximately 40 million 

for 2019. Id. The conclusions of the analysis are 

robust to using this total figure instead. 

550A recent report by the Center for Automotive 

Research estimates that there approximately 43 

million non-fleet, non-private party sales in 2019 

based on privately sourced data. Edgar Faler et al., 

Ctr. for Auto. Rsch., ‘‘Assessment of Costs 

Associated with the Implementation of the Federal 

Trade Commission Notice of Proposed Rulemaking 

(RIN 2022–14214), CFR part 463’’ 5 (2023), https:// 

www.cargroup.org/wp-content/uploads/2023/05/ 

CAR-Report_CFR-Part-463_Final_May-2023.pdf. 

While this would result in a savings estimate 

approximately 22% higher, the Commission relies 

on its analysis of the publicly available data 

described herein. 

551 Daniel S. Hamermesh, ‘‘What’s to Know About 

Time Use? ’’ 30 J. Econ. Survs. 198, 201 (2016), 

https://onlinelibrary.wiley.com/doi/epdf/10.1111/ 

joes.12107. 

552Note that we assume only one consumer is 

involved in each transaction; to the extent that 

multiple members of a household may visit 

dealerships for each transaction, these calculations 

are likely to underestimate the total time savings. 

prohibition on charging for items 

without express, informed consent.542

For non-digital consumers, considerable 

time must be spent at the dealership 

both closely reviewing paperwork (e.g., 

to ensure that unwanted optional addons are not being added to the 

transaction; to ensure that the financing 

terms, including monthly payments, 

total payments, and term length, are as 

expected; and to confirm that terms in 

the contract generally conform to what 

was discussed) and waiting for sales and 

F&I staff at the dealership to consult 

with managers and revise paperwork as 

needed. Digital consumers, however, 

may have access outside the dealership 

to add-on menus where they can select 

their desired F&I products affirmatively 

without worry that dealership staff will 

misrepresent the products or pressure 

them into selecting something 

unwanted. In addition, digital 

consumers may receive and review 

paperwork before arriving at the 

dealership. This way, any necessary 

revisions can be performed by the 

dealership asynchronously so that the 

consumer is free to spend that time as 

they wish instead of being stuck in an 

F&I office. The noted Rule provisions 

will give consumers confidence that the 

add-on options presented to them are 

non-deceptive and the contract 

paperwork they are asked to review will 

not yield any unpleasant surprises. As 

a result, on average they will neither 

need to engage in such close scrutiny of 

their contract documents, nor spend as 

much time waiting for dealership staff 

to speak to managers or make changes 

as the first draft will be more likely to 

conform to their expectations.543

The Commission assumes that the 

Rule will likely not assist consumers 

much (if at all) in reducing time spent 

obtaining a trade-in offer. In our base 

case estimates, we assume non-digital 

consumers will not save additional time 

on obtaining a trade-in offer under the 

Rule. There are various provisions in 

the Rule that touch trade-in offers made 

by dealerships 544 and may increase 

consumer confidence in dealer contracts 

as discussed previously. In addition, 

trade-in values are an important piece of 

transaction pricing, so greater price 

transparency may save consumers time 

on the trade-in aspect of transactions 

that involve them. There is a concern, 

however, that dealers may spend more 

time trying to extract maximum value 

out of any given trade-in opportunity 

once the Rule is in effect. Because the 

Commission believes that greater 

transparency in vehicle pricing and addons will lead to reduced markups on 

these products (see ‘‘Reductions in 

Deadweight Loss’’), it is possible that 

dealers will attempt to make up these 

lost profits by maximizing trade-in 

margins, which may lead to increased 

time spent on negotiations. Since we do 

not have sufficient data to determine the 

balance of these two effects, we assume 

in the base case that they offset. In 

sensitivity analyses where we explore 

alternative assumptions, note that time 

savings from this activity only apply to 

the roughly 50% (by one estimate) of 

vehicle purchase transactions at 

dealerships where consumers trade in a 

vehicle.545

Finally, data from the 2021 Cox 

Automotive Car Buyer Journey Study 

reveal that consumer time spent at nonpurchase dealerships is roughly 82% of 

the time spent at the dealership of 

purchase.546 Additionally, the average 

consumer visits 1 non-purchase 

dealership for each transaction, so 

under the dual assumptions that (1) the 

proportions of time spent at dealerships 

across these activities is consistent 

across purchase and non-purchase 

dealerships and (2) the noted time 

savings are constant as a fraction of time 

spent, we multiply the time savings 

numbers by this ratio to obtain the 

additional time saved at non-purchase 

dealerships. 

Proceeding as in the preliminary 

analysis, we assume that motor vehicle 

purchase, financing, and lease 

transactions will be stable at the 2019 

level of 57.9 million transactions per 

year.547 As discussed previously, the 

final analysis excludes private party, 

fleet, and wholesale transactions. 

According to Edmunds Automotive 

Industry Trends 2020, 19.3% of new 

vehicle sales in 2019 were fleet sales.548

This fraction of the 17.1 million new 

vehicle sales and leases in the data are 

excluded from the analysis. An 

Automotive News article from January 

2023 (citing data from Cox Automotive) 

states that 48% of all used vehicle sales 

occurred outside of the retail 

channel.549 As with new vehicle sales, 

this fraction of the 40.8 million used 

vehicle transactions in the data are 

excluded from the analysis. Adding up 

the covered transactions (35 million) 550

and applying the time savings 

calculated from the base case 

assumptions, we anticipate that the Rule 

will generate a total time savings of 

more than 72 million hours per year. 

According to the Bureau of Labor 

Statistics Occupational Employment 

Statistics, the average hourly wage of 

U.S. workers in 2021 was $29.76, and 

recent research suggests that individuals 

living in the U.S. value their non-work 

time at 82% of average hourly 

earnings.551 Thus, the value of nonwork time for the average U.S. worker 

would be $24.4 per hour. As a result, 

our final analysis refines the estimate to 

a present value of between $12.3 billion 

and $14.9 billion as described in Table 

2.2, which translates to savings of 

roughly $1.75 billion per year.552


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678 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

553See Car Buyer Journey 2019, supra note 537, 

at 9 (Consumers who negotiate (88% vs. 64%) and 

complete paperwork online (74% vs. 65%) are more 

satisfied with their dealership experience.); 2022 

Car Buyer Journey, supra note 25, at 22 (‘‘More 

[financing] steps completed online = higher 

satisfaction & less time at the dealership’’); Cox 

Auto., ‘‘Cox Automotive Car Buyer Journey Study: 

Pandemic Edition’’ 22 (2021), https://

www.coxautoinc.com/wp-content/uploads/2021/02/ 

Cox-Automotive-Car-Buyer-Journey-StudyPandemic-Edition-Summary.pdf (‘‘Heavy Digital 

Buyers were the Most Satisfied’’). 

TABLE 2.2—ESTIMATED BENEFITS OF TIME SAVINGS FOR COMPLETED TRANSACTIONS

2024–2033 

Completed Transactions 

Avg. minutes saved at dealership of purchase/other dealers (by activity): a

Negotiating the Purchase Price ................................... ............................................................................................. 34/28 

Select F&I Add-Ons ..................................................... ............................................................................................. 14/11 

Discussing and Signing Paperwork ............................. ............................................................................................. 20/16 

Get a Trade-In Offer .................................................... ............................................................................................. 0/0 

Hours saved per transaction .............................................. ............................................................................................. 2.05 

Number of covered vehicle transactions per year b ........... ............................................................................................. 34,986,253 

Value of time for vehicle-shopping consumers c ................ ............................................................................................. $24.40 

Abandoned Transactions Unquantified 

Total Quantified Benefits (in millions) ................................. 3% discount rate ................................................................ $14,926 

Total Quantified Benefits .................................................... 7% discount rate ................................................................ $12,290 

Note: Benefits have been discounted to the present at both 3% and 7% rates. aAverages are across all retail transactions; transactions where consumers performed activity digitally under the status quo will have a time 

savings of 0 for that activity. bFor total volume, National Transportation Statistics Table 1–17. For retail/non-fleet fraction, Edmunds Automotive Industry Trends 2020 (for 

new vehicles), supra note 548548, and Cox Automotive via Automotive News (for used vehicles), supra note 549549. cBLS Occupational Employment Statistics (May 2022) and Hamermesh (2016). 

Due to the uncertainty surrounding 

how the Rule will translate into time 

savings for consumers and to which 

activities it will most strongly apply, we 

explore a range of alternative 

assumptions regarding what fraction of 

the documented time savings digital 

consumers experience will be received 

by non-digital consumers under the 

Rule. In our low-end scenario, we 

assume that the Rule will result in half 

the consumer time savings of the base 

case. In our high-end scenario, we 

assume that all the time savings 

experienced by digital consumers under 

the status quo—including time saved 

getting a trade-in offer—will be received 

by non-digital consumers under the 

Rule. The low-end assumptions 

correspond to a total time savings of 

more than 35.85 million hours per year 

while the upper bound assumptions 

correspond to a total time savings of 

more than 115.47 million hours per 

year. The results of this analysis are 

presented in Table 2.3. Importantly, 

over the whole range of these alternative 

assumptions we find that benefits 

exceed costs. In fact, holding other 

benefit and cost estimates constant, the 

time savings generated by the Rule 

could be de minimis and the implied 

benefits would still exceed the costs. 

While there are some activities in the 

car buying process that the Rule may 

not affect (e.g., test driving vehicles, 

etc.), the data discussed suggest that 

there is ample room for the Rule to 

eliminate unnecessary time across 

various activities. And even though 

digital consumers spend less time on 

these activities, results across several 

studies suggest that this reduction in 

time leads to a better experience for 

consumers.553

TABLE 2.3—SENSITIVITY ANALYSIS OF TIME SAVINGS

Low end Base case High end 

Avg. minutes saved at dealership of purchase/other dealers (by activity): a

Negotiating the Purchase Price ............... ......................................................................... 17/14 34/28 34/28 

Selecting F&I Add-Ons ............................ ......................................................................... 7/6 14/11 27/22 

Discussing and Signing Paperwork ......... ......................................................................... 10/8 20/16 39/32 

Get a Trade-In Offer ................................ ......................................................................... 0/0 0/0 18/15 

Hours saved per transaction b ........................ ......................................................................... 1.02 2.05 3.3 

Total Quantified Benefits (in millions) ............. 3% discount rate ............................................ $7,463 $14,926 $24,036 

Total Quantified Benefits ................................ 7% discount rate ............................................ $6,145 $12,290 $19,790 

Note: Benefits have been discounted to the present at both 3% and 7% rates. aAverages are across all retail transactions; transactions where consumers performed activity digitally under the status quo will have a time 

savings of 0 for that activity. bTime savings for ‘‘Get a Trade-In Offer’’ assumed to be zero for lease transactions or sales without trade-ins (estimated at 50%). 

2. Reductions in Deadweight Loss 

The status quo in this industry 

features consumer search frictions, 

shrouded prices, deception, and 

obfuscation. As a result, dealers likely 

charge higher prices for a number of 

products and services than could be 

supported once the Rule is in effect. 

Recent research suggests that when 


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Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 679 

554Marco A. Haan et al., ‘‘A Model of Directed 

Consumer Search,’’ 61 Int’l J. Indus. Org. 223, 223– 

55 (2018), https://doi.org/10.1016/ 

j.ijindorg.2018.09.001; Jose ́ Luis Moraga-Gonzalez et 

al., ‘‘Consumer Search and Prices in the Automobile 

Market.’’ 90 Rev. Econ. Stud. 1394–1440 (2023), 

https://doi.org/10.1093/restud/rdac047. 

555See Off. of Mgmt. & Budget, Exec. Off. of the 

President, ‘‘Circular A–4’’ 38 (2003), https://

www.transportation.gov/sites/dot.gov/files/docs/ 

OMB%20Circular%20No.%20A-4_0.pdf: ‘‘A 

regulation that restricts the supply of a good, 

causing its price to rise, produces a transfer from 

buyers to sellers. The net reduction in the total 

surplus (consumer plus producer) is a real cost to 

society, but the transfer from buyers to sellers 

resulting from a higher price is not a real cost since 

the net reduction automatically accounts for the 

transfer from buyers to sellers.’’ To the extent any 

price changes caused by the Rule result in transfers 

to consumers from dealers who were in violation 

of existing laws, such transfers would be consistent 

with the agency’s mission of providing redress to 

injured consumers and its history of doing so in 

enforcement actions. 

consumers are able to observe prices for 

vehicles before visiting dealerships—as 

is intended by the Rule—prices and 

dealer profits are likely to fall.554 When 

not accompanied by changes in quantity 

(due to a fixed supply of the good), price 

adjustments serve to transfer welfare 

from one side of the market (e.g., 

dealers) to the other (e.g., consumers), 

which typically have no net effect on 

the outcome in a regulatory analysis.555

A decrease in vehicle prices, however, 

will likely also lead to an increase in the 

number sold as the supply is not fixed. 

As a result, this quantity expansion 

effect unambiguously increases welfare 

by reducing the deadweight loss that 

occurs when firms can charge prices 

that are marked up over marginal costs. 

3. Framework 

When a policy reduces the price of a 

good—either through a reduction in 

firm costs or, as in this case, a reduction 

in firm market power—the quantity of 

the good sold will typically increase. If 

a distortion exists in the market causing 

the product in question to be sold at a 

price above the marginal (social) cost of 

production (e.g., a tax, an externality, or 

a markup enabled by market power), 

this quantity expansion has the effect of 

reducing deadweight loss in that 

market. In the simple case where there 

is one good subject to the policy and 

that good has no close substitutes or 

complements, this welfare effect can be 

easily illustrated as in Figure 1. 

The solid line reflects the demand for 

the good, where some quantity is 

purchased at a market price of p0 (point 

A), which is higher than marginal costs 

(MC). Because of this wedge between 

price and marginal costs, there is a 

reduction in welfare relative to the 

outcome where prices equal marginal 

costs; this deadweight loss is illustrated 

on the graph by the bordered triangle 

(ACD). Holding everything else 

constant, when prices fall from p0 to p1, 

this deadweight loss is reduced to some 

extent. Part of this increase in welfare 

will go to consumers, and part will go 

to producers. 

Imagine that this graph depicts the 

market for new automobiles. The Final 

Rule will increase price competition, 

thus reducing market power and 

shifting prices closer to marginal costs 

in the new automobile market. If this 

market satisfied the criteria for the 

simple case described herein (i.e., no 

close substitutes or complements), the 

only data we would need to estimate 

this change in total welfare would be 

the predicted change in price, the 

predicted change in quantity (which can 

be calculated from an estimate of the 

slope or elasticity of the demand curve 

for new vehicles), and some information 

or assumption about the shape of the 

demand curve between points A and B. 

Of course, the new automobile market is 

closely linked to the used automobile 

market, so this simple picture does not 

capture the entire story. 

When a good has a close substitute 

(like used versus new vehicles), a price 

decrease for that good will cause 

demand for the related good to decrease. 

Also, in the case of automobiles, there 

is a long-run link between the new and 


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Figure 1 

-f& 

-

3 P1 

·c 

a.. 

MC -----~------

Quantity 

Demand -••L ii.,-~ Status Quo OWL 

- Expo&DWL - Reduction in OWL 
680 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

556Assmt. & Standards Div., Ofc. of Transp. & Air 

Quality, U.S. Env’t Prot. Agency, ‘‘The Effects of 

New-Vehicle Price Changes on New- and UsedVehicle Markets and Scrappage’’ (2021), https://

cfpub.epa.gov/si/si_public_file_download.cfm?p_

download_id=543273&Lab=OTAQ. 

557See Paul L. E. Grieco et al., ‘‘The Evolution of 

Market Power in the US Automobile Industry’’ 

(2022), mimeo. 

558Paul L. E. Grieco et al., ‘‘The Evolution of 

Market Power in the US Automobile Industry’’ 19 

(2022), mimeo. 

559Paul L. E. Grieco et al., ‘‘The Evolution of 

Market Power in the US Automobile Industry’’ 19 

(2022), mimeo. 

560Aggregate cost of good i is equal to (1¥mi) × 

pi × Qi, where mi, pi, and Qi are the markup, price, 

and quantity sold of good i, respectively. 

561Charles Murry & Yiyi Zhou, ‘‘Consumer 

Search and Automobile Dealer Colocation,’’ 66 

Mgmt. Sci. 1909–1934 (2020), https://doi.org/ 

10.1287/mnsc.2019.3307. 

562 Jose ́ Luis Moraga-Gonzalez et al., ‘‘Consumer 

Search and Prices in the Automobile Market,’’ 90 

Rev. Econ. Stud. 1394–1440 (2022), https://doi.org/ 

10.1093/restud/rdac047. 

563The baseline new vehicle markup estimate of 

15% is defined as the ratio of the price-cost margin 

to unit price, i.e. (pi¥MCi)/pi, and is sometimes 

referred to as the Lerner index. With knowledge of 

either price or marginal cost, this can be rearranged 

to express the price-cost markup, i.e. (pi¥MCi)/MCi, 

which is used in the formula referenced here. 

used vehicle markets as a new vehicle 

purchased today becomes a potentially 

available used vehicle tomorrow. These 

linkages between the markets will 

dampen the demand response to any 

given price change in the primary 

market. In practice, this means that our 

estimates of the responsiveness of new 

vehicle purchases to price changes (i.e., 

the price elasticity of demand for new 

vehicles) will overstate the change in 

quantity resulting from a change in 

prices, because such estimates typically 

assume that all other prices remain 

constant. In addition, if there are 

distortions present in the market for 

related goods (i.e., used vehicles are also 

sold at a markup over marginal costs) 

only examining the welfare effect in the 

primary market will understate the total 

welfare effect, as there will be an 

analogous reduction in deadweight loss 

in the market for the related good. These 

linkages between markets for related 

goods become difficult to explain 

graphically. However, we have included 

in the technical appendix an algebraic 

derivation of the total welfare effect in 

new and used vehicle markets resulting 

from the finalization of the Rule. The 

resulting formula requires estimates of 

seven parameters in order to compute 

the welfare effect: two ‘‘policy 

elasticities’’ that reflect the 

responsiveness of quantities of new and 

used vehicles sold to a change in prices 

in the new vehicle market after all 

adjustments have occurred in both 

markets, two baseline markups that 

represent the differences between prices 

and marginal costs for new and used 

vehicles, two quantities that reflect the 

aggregate costs of all new and used 

vehicles sold under the status quo, and 

the predicted change in prices due to 

the Rule. 

4. Estimation 

To obtain ‘‘policy elasticities’’ we 

reference a U.S. Environmental 

Protection Agency report titled ‘‘The 

Effects of New-Vehicle Price Changes on 

New- and Used-Vehicle Markets and 

Scrappage’’ (‘‘EPA Report’’).556 In this 

report, the authors ‘‘developed a 

theoretical model of the relationships 

between new- and used-vehicle markets, 

scrappage, and total vehicle inventory’’ 

that allows for simulation of prices and 

quantities in these markets. The model 

is calibrated using a range of demand 

elasticity estimates from a review of the 

relevant literature on auto markets. The 

resulting simulations examine the longrun ‘‘steady state’’ of vehicle inventories 

and demand, accounting for crossmarket demand effects as well as the 

endogenous supply of used vehicles 

resulting from changes in demand for 

new vehicles in previous periods. 

Importantly, among the outputs of their 

simulations are the ‘‘policy price 

elasticities’’ required by our welfare 

change formula. Our base case estimates 

of deadweight loss reduction use the 

long-run policy price elasticities that 

result from calibrating the model with 

the EPA Report’s intermediate values for 

the aggregate new vehicle and outside 

option demand elasticities, but we 

explore sensitivity to other calibration 

scenarios. 

To obtain baseline estimates of newvehicle markups, we refer to a recent 

paper entitled ‘‘The Evolution of Market 

Power in the US Automobile Industry’’ 

by Paul Grieco, Charles Murry, and Ali 

Yurukoglu.557 The authors specify a 

model of the U.S. new car industry to 

explore trends in concentration and 

markups. The authors find that markups 

in the industry have been falling over 

time generally, but have been fairly 

stable since the early 2000s.558 As our 

baseline, we use their most recent 

estimate of industry markups, which 

was 15% in 2018.559 While this estimate 

reflects markups over production costs 

by manufacturers and not markups over 

wholesale prices paid by dealers, it is 

the wedge between retail price and 

production cost that matters for welfare. 

As we are unaware of any publicly 

available data measuring used-vehicle 

markups, we explore two alternatives 

that we believe reflect the limiting 

cases: (1) used vehicles have no markup 

and (2) used-vehicle markups are the 

same as new-vehicle markups. 

We obtain both quantities of new- and 

used-vehicles sold as well as average 

prices from National Transportation 

Statistics, Table 1–17. As before, we 

exclude private party, fleet, and 

wholesale transactions. This exclusion 

is likely to bias our estimate of the total 

welfare effect downward because, 

unlike the time savings benefits of the 

Rule which may be restricted to dealerconsumer transactions, the price effects 

of the Rule are likely to carry over to 

private party and fleet transactions. 

Using these aggregate figures along with 

an estimate of baseline markups, we 

estimate the aggregate cost of new- and 

used-vehicles sold in 2019.560

Finally, based on the academic 

literature on search costs in the 

automobile market, the Rule is expected 

to reduce prices of new vehicles by 

reducing the markup that dealers are 

able to charge over marginal costs. We 

have identified two papers that 

empirically estimate the effect of price 

transparency or reduced search frictions 

on auto markups by specifying a 

structural model of the new-vehicle 

market, estimating the structural 

parameters, and then conducting 

counterfactual simulations where search 

frictions are reduced. Murry and Zhou 

(2020) simulate a full information 

counterfactual in the Ohio automobile 

market where search frictions are 

eliminated entirely and find that 

markups are reduced by $333.561

Moraga-Gonzalez et al. (2022) simulate 

a counterfactual in the Dutch 

automobile market where prices are 

observed prior to costly consumer 

search (i.e., visiting dealerships) and 

find that markups are reduced from 

40.52% to 32.59%.562 For our base case 

estimates, we use the smaller Murry and 

Zhou (2020) estimate, primarily because 

their model is estimated using U.S. data 

consistent with our setting. However, 

we note that Moraga-Gonzalez et al. 

offers evidence to suggest that 

significantly larger changes in markups 

may result from the Rule. 

Using these parameters obtained from 

the literature in combination, we 

implement the formula for the change in 

total welfare given in the technical 

appendix. For each market—new and 

used—the formula multiplies the policy 

price elasticity by the percent change in 

price to get the percent change in 

quantity, and then multiplies this by the 

aggregate markup (as given by the pricecost markup 563 at baseline times the 

aggregate cost of baseline transactions) 

to get the approximate change in total 

welfare per year. As an example, our 

base case estimate assumes a policy 


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Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 681 

564 2020 Cox Automotive Car Buyer Journey, 

supra note 25, at 37. 

565See, e.g., Off. of the Sec’y, Dep’t of Transp., 

Dkt. No. DOT–OST–2010–0140, ‘‘Enhancing Airline 

Passenger Protections II—Final Regulatory 

Analysis’’ (Apr. 20, 2011), https://

www.regulations.gov/document/DOT-OST-2010- 

0140-2046. 

566Applicable wage rates for the Commission’s 

preliminary regulatory analysis, which was 

published in its NPRM, were based on data from the 

Bureau of Labor Statistics’ May 2020 National 

Industry-Specific Occupational Employment and 

Wage Estimates for NAICS industry category 

441100—Automobile Dealers, which is available at 

Continued 

price elasticity of new-vehicle demand 

of ¥0.25, a policy price elasticity of 

used-vehicle demand (with respect to 

new-vehicle price) of ¥0.04, and used 

car markups equal to new car markups 

(15%), resulting in the following 

calculation: 

This annual reduction in deadweight 

loss is then applied to each year of the 

10-year analysis period and discounted 

to the present to yield the total benefit. 

We highlight this base case (bolded in 

Table 2.4) but explore several scenarios 

that vary along two dimensions: (1) the 

‘‘policy elasticity’’ of new- and usedvehicle demand with respect to the 

change in price and (2) the existence of 

baseline markups in the used-vehicle 

market. In Table 2.4, baseline markups 

for used vehicles vary across columns 

while the relevant policy price 

elasticities vary across rows: Scenario A 

corresponds to new-/used-vehicle 

elasticities of ¥0.14 and 0.01, Scenario 

B corresponds to new-/used-vehicle 

elasticities of ¥0.17 and ¥0.04, 

Scenario C corresponds to new-/usedvehicle elasticities of ¥0.23 and ¥0.10, 

and Scenario E corresponds to new-/ 

used-vehicle elasticities of ¥0.39 and 

¥0.12. 

TABLE 2.4—REDUCTION IN DEADWEIGHT LOSS (IN MILLIONS), 2024–2033 

Scenario 

No used-vehicle markups Symmetric markups 

Total @ 3% 

discount 

Total @ 7% 

discount 

Total @ 3% 

discount 

Total @ 7% 

discount 

A ............................................................................................... $617 $508 $568 $468 

B ............................................................................................... 749 617 945 778 

C .............................................................................................. 1,014 835 1,504 1,238 

D .............................................................................................. 1,102 907 1,298 1,069 

E ............................................................................................... 1,719 1,415 2,307 1,899 

Note: Benefits have been discounted to the present at both 3% and 7% rates. Scenarios correspond to those in Table 7–2 of ‘‘The Effects of 

New-Vehicle Price Changes on New- and Used-Vehicle Markets and Scrappage.’’ New-vehicle demand elasticities range from ¥0.4 (Scenarios 

A, B, and C) to ¥0.8 (Scenario D) to ¥1.27 (Scenario E). Outside option elasticities vary from 0 (Scenario A) to ¥0.05 (Scenarios B and D) to 

¥0.14 (Scenarios C and E). New/Used cross-price elasticities are set such that substitution away from new vehicles flows almost entirely to 

used-vehicles, with only small effects on the total number of vehicles. All scenarios hold scrappage elasticity fixed at ¥0.7. 

5. Benefits Related to More Transparent 

Negotiation 

An additional, albeit difficult to 

quantify, benefit is the reduction in 

discomfort and unpleasantness that 

consumers associate with negotiating 

motor vehicle transactions under the 

status quo. According to the 2020 Cox 

Automotive Car Buyer Journey study, 

filling out paperwork, negotiating 

vehicle price, and dealing with 

salespeople are three of the top four 

frustrations for consumers at car 

dealerships.564 Once the Rule is in 

effect, all three of these issues will be 

mitigated somewhat by the transparency 

facilitated by the Rule’s required 

disclosures and the time that consumers 

spend shopping and negotiating motor 

vehicle transactions will be less 

stressful. While we expect an increase 

in social welfare through this channel, 

due to a lack of data allowing this more 

qualitative benefit to be translated into 

a quantitative gain, these benefits are 

left unquantified in the analysis. 

C. Estimated Costs of Final Rule 

In this section, we describe the costs 

of the Rule provisions as enumerated in 

SBP VII.A, provide quantitative 

estimates where possible, and describe 

costs that we can only assess 

qualitatively. Some industry 

commenters questioned the 

appropriateness of the data and 

assumptions used in the NPRM, 

including the discussion of costs in the 

preliminary regulatory analysis. The 

Commission used a variety of data 

sources in its calculations for the NPRM 

and in the Rule, including wage data 

from the Bureau of Labor Statistics 

Occupational Employment Statistics, 

establishment counts from U.S. Census 

County Business Patterns, transaction 

counts from National Transportation 

Statistics, and breakdowns of motor 

vehicle transactions (e.g., by financing, 

GAP agreement, F&I add-ons) from 

numerous industry sources. Where such 

data was not available (e.g., regarding 

time devoted to compliance tasks), the 

Commission made assumptions based 

on a review of previous regulatory 

analyses that featured similar 

requirements, with adjustments made 

based on our understanding of the 

particulars of motor vehicle dealer 

operations.565

Throughout this section, the cost of 

employee time is monetized using 

wages obtained from the Bureau of 

Labor Statistics Industry-Specific 

Occupational Employment and Wage 

Estimates for Automobile Dealers.566


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= 18% X $334,115,569,664 X -0.25 X -1 % + 18% X $371,555,893,248 X -0.04 X -1 % 

= $152,143,550 per year 
682 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

https://www.bls.gov/oes/2020/may/oes_nat.htm. 

Labor rates in the present analysis have been 

updated based on data from the Bureau of Labor 

Statistics’ May 2022 National Industry-Specific 

Occupational Employment and Wage Estimates for 

NAICS industry category 441100—Automobile 

Dealers, which is available at https://www.bls.gov/ 

oes/current/naics4_441100.htm. 

567This assumption would hold, for example, if 

both the product and labor markets in this industry 

were competitive. 

568Comment of Nat’l Auto. Dealers Ass’n, Doc. 

No. FTC–2022–0046–8368 at 299–300. 

This is valid under the assumption that 

the opportunity cost of hours spent in 

compliance activities is hours spent in 

other productive activities, the social 

value of which is summarized by the 

employee’s wage.567 To the extent that 

these activities can be accomplished 

using time during which employees 

would otherwise be idle under the 

status quo, our estimates will overstate 

the welfare costs of the Rule. 

1. Prohibited Misrepresentations 

In its preliminary analysis, the 

Commission presented two scenarios 

that estimated the costs associated with 

the Rule provisions prohibiting 

misrepresentations. First, as all the 

misrepresentations prohibited by the 

Rule are material and therefore 

deceptive under section 5 of the FTC 

Act, one scenario assumed that all 

motor vehicle dealers are compliant 

with section 5 under the status quo and 

will therefore conduct no additional 

review. 

The second scenario allowed for costs 

incurred by firms because of the 

enhanced penalty associated with 

violating the Rule (relative to a de novo 

violation of section 5 of the FTC Act) 

under the assumption that dealers may 

expend additional resources to ensure 

compliance. This ‘‘heightened 

compliance review’’ scenario assumed 

that each of the 46,525 dealers would 

have a professional spend 5 additional 

minutes reviewing each public-facing 

representation (assumed to be 150 per 

year on average). At a labor rate of 

$26.83 per hour for compliance officers 

employed at auto dealers, this cost was 

estimated to be $15.6 million per year. 

The Commission received comments 

about the appropriateness of the data 

and assumptions used to estimate the 

cost of complying with this provision of 

the Rule. The most specific criticism 

contended that the number of 

documents dealers would need to 

review would be ‘‘several times’’ the 

150 assumed and that review would 

require at least 15 minutes per 

document because ‘‘dealers typically do 

not fully control the advertising 

platforms they use given the direct 

involvement of the vehicle OEMs . . . 

and that of other third parties. Also, 

many dealers, and especially small 

business dealers do not employ internal 

compliance officers or attorneys who 

could conduct marketing reviews.’’ 568

As there is scant empirical evidence 

provided for these assertions, the 

Commission’s preliminary estimates 

remain unchanged (with the exception 

of updates to more recent data where 

available). However, we have conducted 

a sensitivity analysis in which all labor 

hours in the base case analysis are 

increased by an order of magnitude, in 

keeping with the spirit of the comments 

discussed; see SBP VII.G. As can be seen 

in the results from that analysis, the 

Rule clearly still generates net benefits 

for society. 

TABLE 3.1—ESTIMATED COMPLIANCE COSTS FOR PROHIBITED MISREPRESENTATIONS

2024–2033 

Scenario 1—No Review: 

No Cost ............................................................................. .................................................................................................. $0 

Total Cost .................................................................. .................................................................................................. $0 

Scenario 2—Heightened Compliance Review: 

Number of dealers a .......................................................... .................................................................................................. 47,271 

Number of documents per dealer per year ...................... .................................................................................................. 150 

Minutes of review per document ...................................... .................................................................................................. 5 

Cost per hour of review .................................................... .................................................................................................. $31.21 

Total Cost ................................................................................. 3% discount rate ..................................................................... $157,310,579 

Total Cost ................................................................................. 7% discount rate ..................................................................... $129,526,073 

Note: In scenarios with ongoing expenses, costs have been discounted to the present at both 3% and 7% rates. a County Business Patterns 2021, NAICS Code 4411 (Automobile Dealers, used and new). 

2. Required Disclosure of Offering Price 

in Advertisements and in Response to 

Inquiry 

The Rule requires all dealers to 

disclose an offering price in any 

advertisement that references an 

individual vehicle or in response to any 

consumer inquiry about an individual 

vehicle. For this provision, the 

Commission’s preliminary analysis 

presented two cost scenarios for dealers 

when complying with the Rule. First, 

because dealers already price all 

vehicles in inventory under the status 

quo, one scenario assumed that there 

would be no additional cost of 

complying with this provision. This 

scenario assumes that the initial pricing 

and any subsequent re-pricing of 

vehicles in inventory would take no (or 

minimal) additional time under the 

Rule. 

As with the prohibition on 

misrepresentations, the second scenario 

considers the enhanced penalty 

associated with violating the Rule and 

allows for costs given that dealers may 

expend additional resources to ensure 

that the prices they disclose conform to 

the Rule’s definition of offering price, 

thus minimizing the risk of penalties 

should they fail to conform to that 

definition. The latter scenario assumed 

that, in the first year under the Rule, 

each of the 46,525 dealers would have 

a sales and marketing manager spend 8 

hours reviewing their policies and 

procedures for determining the publicfacing prices of vehicles in inventory. In 

addition, each dealer would employ a 

programmer for 8 hours to update any 

automated systems that need to be 

updated in accordance with these new 

policies and procedures. At labor rates 

of $63.93 per hour and $28.90, 

respectively, this cost was estimated at 

$34.5 million. Both scenarios assume 

that, once calculated, the time required 

to train employees to include prices in 

response to consumer inquiries about 

specific vehicles will either be 

negligible or be subsumed by training 

costs included under other provisions. 

Finally, the time required to deliver the 

disclosures is also negligible, as prices 

are already typically disclosed in 


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569Comment of Nat’l Auto. Dealers Ass’n, Doc. 

No. FTC–2022–0046–8368 at 300. 

advertisements and in interactions with 

consumers under the status quo; the 

Rule just requires the price to conform 

to a specific definition. 

Some commenters raised issues with 

the assumptions regarding the time and 

resources necessary to determine 

compliant prices as well as deliver the 

required disclosures. The comments 

asserted that vehicle prices change 

frequently in response to market 

conditions, which would make it 

difficult to ensure that offering prices 

are accurate. Additionally, comments 

disputed the notion that delivery of the 

information to consumers in accordance 

with the Rule’s provisions would not be 

costly, in terms of employee time and 

consumer time. One comment suggested 

that ‘‘there would be an average of three 

Offering Price disclosures based there 

[sic] being an average of three dealercustomer discussions regarding three 

specific motor vehicles, per 

transaction,’’ 569 asserting that the 

frequency of these disclosures would 

have implications for the cost estimates 

that had not been considered in the 

preliminary analysis. 

If indeed the Rule required significant 

additional employee time spent per 

transaction, that would have 

implications for the cost estimates. 

However, as previously discussed, it is 

the understanding of the Commission 

that virtually all dealer-customer 

discussions regarding specific motor 

vehicles that occur under the status quo 

already include time devoted to a 

discussion of the vehicle’s price. The 

only change under the Rule is that, 

within that price discussion an offering 

price (as defined by the Rule) must be 

provided. The cost of determining this 

price is included under the second 

scenario in our preliminary analysis, 

and sensitivity to the specific 

assumptions of that scenario have been 

explored in the Appendix. The results 

from our analysis indicate that the Rule 

generates net benefits for society under 

a wide range of plausible assumptions 

about the inputs to our cost 

calculations. 

Commenters also raised concerns 

about the potential for behavioral 

adjustment by dealerships, choosing to 

refrain from advertising individual 

vehicles or responding to consumer 

inquiries about specific vehicles and 

thus increasing consumers’ costs of 

search. The Commission, however, has 

not been presented with compelling 

evidence that dealers will forego 

competition with other dealers on price, 

choosing instead to default to 

advertising a focal price (such as 

MSRP). Indeed, the Commission’s 

offering price disclosure requirement is 

similar to existing requirements in a 

number of States, and the Commission 

is not aware of any such behavioral 

adjustments (e.g., eliminating prices 

from advertisements, refusing to 

respond to consumer inquiries, etc.) 

having occurred in those States. As a 

result, the Commission’s preliminary 

estimates remain unchanged (with the 

exception of updates to more recent data 

where available). 

TABLE 3.2—ESTIMATED COMPLIANCE COSTS FOR OFFERING PRICE DISCLOSURES

2024 

Scenario 1—No Review: 

No Cost ............................................................................................................................................................................... $0 

Total Cost .................................................................................................................................................................... $0 

Scenario 2—Calculation of Offering Price: 

Number of dealers a ............................................................................................................................................................ 47,271 

Pricing hours per dealer ..................................................................................................................................................... 8 

Cost per hour of pricing ...................................................................................................................................................... $80.19 

Programming hours per dealer ........................................................................................................................................... 8 

Cost per hour of programming ........................................................................................................................................... $40.24 

Total Cost .................................................................................................................................................................... $45,542,772 

a County Business Patterns 2021, NAICS Code 4411 (Automobile Dealers, used and new). 

3. Disclosure of Add-On List and 

Associated Prices 

In the NPRM, the proposed rule 

would have required all dealers to 

disclose an itemized menu of all 

optional add-on products and services 

along with prices, or price ranges, on all 

dealer-operated websites, online 

services, and mobile applications as 

well as at all dealership locations. 

Various commenters expressed concern 

that the add-on list requirement would 

have been too complex and potentially 

confusing, as discussed in the 

paragraph-by-paragraph analysis in SBP 

III.D.2(b). As a result, the Commission 

has determined not to finalize § 463.4(b) 

of the proposed rule. While the 

preliminary analysis estimated 

compliance costs between 

approximately $42 million and $43 

million for the disclosure of add-on lists 

and associated prices, those costs are 

not included in the final analysis. 

4. Required Disclosure of Total of 

Payments for Financing/Leasing 

Transactions 

The Rule requires all dealers to 

disclose, when representing a monthly 

payment, the total of payments for the 

financing or leasing contract. In 

addition, in any comparison of two 

payment options with different monthly 

payments, the dealer is required to 

disclose that the option with the lower 

monthly payment features a higher total 

of payments (if true). 

The Commission’s preliminary 

analysis presented two cost scenarios, 

corresponding to different methods by 

which dealers may choose to comply 

with the Rule. In the first scenario, we 

assumed that dealers would incur a onetime, upfront cost of both designing the 

required disclosures and informing 

associates of their obligations to provide 

the disclosures. Importantly, ongoing 

costs on a per transaction basis were 

assumed to be negligible, reflecting a 

compliance regime where dealers 

already generate the required 

information during the normal course of 

business and must only convey it to 

consumers at an appropriate point in 

the transaction. In the second scenario, 

we assumed that dealers incur an 

additional ongoing cost per financed or 

leased transaction in order to 

communicate the required disclosures 


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684 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

570While disclosures of this nature are already 

required to be present in the financing contract by 

the Truth in Lending Act (TILA), the Rule would 

change the timing of a subset of those disclosures. 

As a result, the dealer may have to develop and 

deliver a separate document in the event that the 

standard TILA disclosure has not yet been 

generated at the point where disclosure is required 

under the Rule. 

571Comment of Nat’l Auto Dealers Ass’n, Doc. 

No. FTC–2022–0046–8368 at 301. 

572Without cross-tabulations of fleet sales and 

sales involving financing, we assume that these are 

independent such that the fraction of covered 

transactions involving financing is equal to the 

fraction of covered transaction times the fraction of 

financed transactions. 

to consumers in writing, reflecting a 

compliance regime where dealers find it 

necessary to maintain a documentary 

record of compliance with the Rule.570

The upfront costs (and total costs 

under Scenario 1) of complying with 

this provision as estimated by the 

preliminary analysis were limited to 8 

hours spent by a compliance manager 

(at a rate of $26.83) on the creation of 

a template disclosure script that 

contains the required information and 

informing sales staff of their obligations 

to deliver the disclosure at an 

appropriate time during the transaction. 

This cost was estimated at $10 million. 

The preliminary estimates of 

additional ongoing costs—as in Scenario 

2—included 2 minutes of sales associate 

time per financed/leased transaction (at 

a rate of $21.84) spent on the process of 

populating and delivering a printed 

version of the disclosure, with $0.15 per 

disclosure spent on printing costs. The 

total additional cost under this scenario 

is estimated at $213.4 to $249.5 million. 

Comments from industry groups 

asserted that the preliminary analysis 

underestimated training costs and that it 

would be difficult to determine the total 

of payments for financing prior to 

knowing the details of the transaction. 

One comment contended that ‘‘these 

mandates . . . necessarily would 

involve significant annual training 

requirements for new employees given 

that . . . the average dealer experiences 

an annual sales consultant turnover rate 

of 67%.’’ 571 The comment further 

asserted that dealers cannot determine 

the total cost of a financing or leasing 

agreement without knowing the terms 

for which consumers qualify and what 

terms they want. The comment argued 

that as a result, only the scenario with 

costs incurred on a per transaction basis 

should be considered. Finally, the 

comment argued that the per-transaction 

costs in Scenario 2 are too low, both 

because the Commission underestimates 

the time required to deliver, discuss, 

and review disclosures and because 

multiple disclosures would have to be 

made per transaction (as terms are 

changed). 

These comments misunderstand the 

Commission’s analysis with respect to 

the costs of complying with this 

provision. Scenario 1 does not 

anticipate that the dealer presents a 

consumer with the total of payments for 

a financing or leasing contract at the 

outset of the transaction. It requires only 

that, at the point where the dealer 

engages in discussions regarding 

different monthly payments for 

financing or leasing arrangements, the 

information that must be disclosed (i.e., 

the total of payments and a comparison 

of these totals across differing monthly 

payments) is already available to the 

dealer under the status quo. The only 

additional cost incurred per transaction 

would be the delivery of this 

information to the consumer (the 

determination of which is contemplated 

in the costs estimated under Scenario 1). 

With respect to the comment 

regarding insufficient allowance for 

training costs in light of employee churn 

in the industry, the Commission has 

determined this to be a valid critique of 

the preliminary analysis. As a result, the 

final regulatory analysis includes an 

additional ongoing cost for both 

Scenarios. This ongoing cost includes 

training for sales staff and budgets 1 

hour of training for each of the 417,110 

sales and related employees across the 

industry, at an (average) cost of $29.43 

per hour. The resulting additional 

ongoing costs in both scenarios amounts 

to $12.3 million per year. Further, as 

discussed in a previous section, the 

final analysis excludes private party, 

fleet, and wholesale transactions.572 The 

remainder of the Commission’s 

preliminary estimates remain 

unchanged (with the exception of 

updates to more recent data where 

available). Concerns about 

underestimates of the time required to 

review disclosures on a per-transaction 

basis are addressed by the Commission’s 

sensitivity analyses conducted in the 

Appendix. 

TABLE 3.4—ESTIMATED COMPLIANCE COSTS FOR FINANCING COSTS

2024 only 2024–2033 

Scenario 1—Creation of disclosure and training 

only: 

Upfront costs: 

Number of dealers .................................... ................................................................................. 47,271 ..............................

Compliance manager hours per dealer .... ................................................................................. 8 ..............................

Cost per hour of disclosure creation ........ ................................................................................. $31.21 ..............................

Subtotal ............................................. ................................................................................. $11,802,623 ..............................

Ongoing costs: 

Number of sales and related employees a ................................................................................. .............................. 417,110 

Training hours per employee ................... ................................................................................. .............................. 1 

Cost per hour of training .......................... ................................................................................. .............................. $29.43 

Subtotal ............................................................ 3% discount rate .................................................... .............................. $104,712,908 

7% discount rate .................................................... .............................. $86,218,307 

Scenario 1—Total Cost ................................... 3% discount rate .................................................... .............................. $116,515,532 

7% discount rate .................................................... .............................. $98,020,931 

Scenario 2—Disclosures per transaction: 

Covered new vehicle sales per year b ............. ................................................................................. .............................. 10,343,319 

% New vehicle sales involving financing c ....... ................................................................................. .............................. 81% 

Covered used vehicle sales per year .............. ................................................................................. .............................. 21,219,640 

% Used vehicle sales involving financing ....... ................................................................................. .............................. 35% 

Covered new vehicle leases per year ............. ................................................................................. .............................. 3,423,294 


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Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 685 

573The physical costs are $.15 per paper 

disclosure and $.02 per electronic disclosure, 

assuming that 27% are made electronically. This 

assumption is informed by a consumer survey that 

indicates 73% of consumers with motor vehicles 

prefer to receive registration renewal notices by 

mail as opposed to electronically. See Consumer 

Action, ‘‘Your opinion wanted: Paper vs. electronic 

bills, statements and other communications’’ 4 

(2018–2019), https://www.consumer-action.org/ 

downloads/Consumer_Action_Paper_v_electronic_

survey.pdf (showing that 1800 of 2456 respondents 

who owned and needed to periodically register a 

motor vehicle preferred mail notices). 

TABLE 3.4—ESTIMATED COMPLIANCE COSTS FOR FINANCING COSTS—Continued 

2024 only 2024–2033 

Total transactions involving monthly payments/financing.................................................................................. .............................. 19,228,256 

Disclosure minutes per transaction ................. ................................................................................. .............................. 2 

Cost per hour of disclosure ............................. ................................................................................. .............................. $28.41 

Printing cost per disclosure ............................. ................................................................................. .............................. $0.15 

Subtotal ............................................................ 3% discount rate .................................................... .............................. $179,930,957 

7% discount rate .................................................... .............................. $148,151,196 

Total Cost ........................................................ 3% discount rate .................................................... .............................. $296,446,489 

7% discount rate .................................................... .............................. $246,172,126 

Note: In scenarios with ongoing expenses, costs have been discounted to the present at both 3% and 7% rates. aBureau of Labor Statistics Industry-Specific Occupational Employment and Wage Estimates for NAICS Code 441100—Automobile Dealers, 

May 2021. bFor total volume, National Transportation Statistics Table 1–17. For retail/non-fleet fraction, Edmunds Automotive Industry Trends 2020 (for 

new vehicle) and Cox Automotive via Automotive News (for used vehicles). c Melinda Zabritski, Experian Info. Sols. Inc., ‘‘State of the Automotive Finance Market Q4 2020’’. 

5. Prohibition on Charging for Add-Ons 

That Provide No Benefit 

The Rule prohibits dealers from 

charging for add-on products or services 

from which the targeted consumer 

would not benefit. Compliance with this 

provision will require dealers to 

develop policies and transaction-level 

rules about when consumers can be 

charged for add-on products and 

services. The Rule as proposed in the 

NPRM also would have included 

additional provisions relating to addons that have not been finalized. These 

included a prohibition on charging for 

optional add-on products or services 

unless dealership employees made a 

number of disclosures at various points 

before finalizing a transaction. This 

provision would have required each 

dealer to design form disclosures, create 

a system for populating these forms, 

train their sales staff on the disclosure 

requirements, and provide the 

disclosures in writing, with the 

appropriate information filled in, to 

each consumer prior to completing the 

transaction. 

The Commission’s preliminary 

analysis relating to the cost of 

complying with these disclosure 

requirements budgeted for 8 hours of 

compliance manager time (at a cost of 

$26.83 per hour) and 4 hours of sales 

manager time (at a cost of $63.93 per 

hour) to design disclosure forms, and an 

additional 8 hours of programmer time 

(at a cost of $28.90) to create a system 

to populate these forms. The 

preliminary analysis also budgeted for 2 

minutes of sales associate time (at a rate 

of $21.84 per hour) and $0.11 in 

printing/electronic delivery costs per 

disclosure, with the number of 

disclosures determined by the fraction 

of transactions involving optional addons and/or financing. 

In response to numerous comments, 

the Commission has determined not to 

finalize the proposal in § 463.5(b), 

which would have required the delivery 

of written disclosures and 

acknowledgement via signature of those 

disclosures by consumers. Various 

commenters were concerned that the 

add-on disclosures would add 

documents and time to the transaction. 

In response to these comments, the 

Commission has determined to omit 

what would have been the only 

provision affirmatively requiring the 

dealer and consumer to review 

additional documentation during a 

transaction. As a result, while the 

preliminary analysis estimated 

compliance costs between 

approximately $883 million and $1 

billion for the disclosure of total costs 

for cash and financed transactions with 

optional add-on products, the cost 

estimate in the final analysis is on the 

order of one-tenth to one-half of the 

preliminary estimate (depending on the 

scenario). 

As a result, the Commission has 

substantially revised the cost analysis in 

this section. First, the Commission 

assumes that each dealer will employ 8 

hours of compliance manager time (at a 

rate of $31.21) and 8 hours of sales 

manager time (at a rate of $80.19) in the 

first year under the Rule, to cull add-ons 

with no value from their offerings and 

develop policies regarding when certain 

add-ons may or may not be sold. 

Second, the Commission budgets for 1 

hour of training per year for each of the 

417,110 sales and related employees 

across the industry, to apprise them of 

these policies and their obligations 

under the Rule. Finally, the Commission 

includes a second cost scenario in 

which dealers will choose to deliver one 

itemized disclosure to each customer 

before the finalization of each 

transaction. Although this is not 

required under the Final Rule, dealers 

may wish to have documentation of 

compliance with the provisions of the 

Rule. As in the preliminary analysis, the 

Commission assumes that each dealer 

will employ 8 hours of compliance 

manager time and 4 hours of sales 

manager time creating this disclosure 

and 8 hours of programmer time 

creating a system to populate these 

forms when provided inputs by sales 

staff. The same occupational wage data 

have been used, but the rates have been 

updated to match the most recent data 

available. We further assume, as in the 

preliminary analysis, that sales staff will 

spend 2 minutes per disclosure (at a rate 

of $28.41 per hour) updating, printing, 

and delivering these forms to consumers 

and that the physical costs of delivering 

the disclosure are roughly $.11 per 

disclosure.573 Finally, as discussed in a 

previous section, the final analysis 

excludes private party, fleet, and 

wholesale transactions. 


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686 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

TABLE 3.5—ESTIMATED COMPLIANCE COSTS FOR PROHIBITION ON CERTAIN ADD-ONS

2024 only 2024–2033 

Scenario 1—Policies and Training Only: 

Upfront costs: 

Number of dealers .................................... ................................................................................. 47,271 ..............................

Compliance manager hours per dealer .... ................................................................................. 8 ..............................

Cost per hour of compliance manager ..... ................................................................................. $31.21 ..............................

Sales manager hours per dealer .............. ................................................................................. 8 ..............................

Cost per hour of sales manager .............. ................................................................................. $80.19 ..............................

Subtotal ............................................. ................................................................................. $42,127,915 ..............................

Ongoing costs: 

Number of sales and related employees ................................................................................. .............................. 417,110 

Training hours per employee ................... ................................................................................. .............................. 1 

Cost per hour of training .......................... ................................................................................. .............................. $29.43 

Scenario 1—Subtotal ....................................... 3% discount rate .................................................... .............................. $146,840,824 

7% discount rate .................................................... .............................. $128,346,223 

Scenario 2—Disclosure creation and delivery: 

Number of dealers ........................................... ................................................................................. 47,271 ..............................

Compliance manager hours per dealer ........... ................................................................................. 8 ..............................

Cost per hour of compliance manager ............ ................................................................................. $31.21 ..............................

Sales manager hours per dealer ..................... ................................................................................. 4 ..............................

Cost per hour of sales manager ..................... ................................................................................. $80.19 ..............................

Programmer hours per dealer ......................... ................................................................................. 8 ..............................

Cost per hour of programmer .......................... ................................................................................. $40.24 ..............................

Subtotal .................................................... ................................................................................. $42,182,750 ..............................

Disclosure delivery (per transaction): 

New vehicle sales per year ............................. ................................................................................. .............................. 10,343,319 

Used vehicle sales per year ............................ ................................................................................. .............................. 21,219,640 

Minutes per disclosure .................................... ................................................................................. .............................. 2 

Cost per hour of disclosure ............................. ................................................................................. .............................. $28.41 

Physical costs per disclosure .......................... ................................................................................. .............................. $0.11 

Subtotal .................................................... 3% discount rate .................................................... .............................. $285,904,302 

7% discount rate .................................................... .............................. $235,407,319 

Scenario 2—Total Cost ............................ 3% discount rate .................................................... .............................. $474,927,875 

7% discount rate .................................................... .............................. $405,936,291 

Note: In scenarios with ongoing expenses, costs have been discounted to the present at both 3% and 7% rates. 

6. Requirement To Obtain Express, 

Informed Consent Before Any Charges 

The Rule requires dealers to obtain 

express, informed consent before 

charging any consumer for any product 

or service in association with the sale, 

financing, or lease of a vehicle. Because 

we presume that all dealers who are 

complying with the law currently have 

policies in place to prevent charges 

without consent, we assume that there 

will be no additional costs imposed by 

this provision. 

7. Recordkeeping 

The Final Rule requires dealers to 

retain records of all documents 

pertaining to Rule compliance. These 

recordkeeping requirements include: 

• Copies of all materially different 

marketing materials, sales scripts, and 

training materials that discuss sales 

prices and financing or lease terms. 

• Records demonstrating that all addons charged for meet the requirements 

stated in the Rule, including 

calculations of loan-to-value ratios in 

contracts including GAP agreements. 

• Copies of all purchase orders, 

financing and lease contracts signed by 

the consumer (whether or not final 

approval is received), and all written 

communications with any consumer 

who signs a purchase order or financing 

or lease contract. 

• Copies of all written consumer 

complaints, inquiries related to add-ons, 

and inquiries and responses about 

individual vehicles. 

Most of these documents are already 

produced in the normal course of 

business under the status quo, or the 

costs of creating them have already been 

accounted for in previous sections. In its 

preliminary analysis, the Commission 

assumed that each dealer would incur 

an upfront cost, employing 8 hours of 

programmer time, 5 hours of clerical 

time, 1 hour of sales manager time, and 

1 hour of compliance officer time, at 

hourly rates of $28.90, $18.37, $63.93, 

and $26.83, respectively, in order to 

upgrade their systems and create the 

templates necessary to accommodate 

retention of all relevant materials. The 

Commission also assumed that each 

dealer would employ 1 additional 

minute of sales staff time per transaction 

to populate forms and store relevant 

materials. 

One industry commenter contended 

that the proposed rule would impose 

substantial and costly recordkeeping 

mandates, citing primarily the various 

channels through which dealers would 

be required to capture and retain 

communications. The Commission 

believes the recordkeeping requirements 

strike an appropriate balance, requiring 

the retention of materials needed to 

allow effective enforcement while being 

mindful of dealer burden. In addition, 

the recordkeeping requirements are 

similar to analogous requirements in 

other Commission disclosure rules, as 


khammond on DSKJM1Z7X2PROD with RULES2
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574 16 CFR 310.5 (Telemarketing Sales Rule); 16 

CFR 437.7 (Business Opportunity Rule); 16 CFR 

453.6 (Funeral Industry Practices Rule); 16 CFR 

301.41 (Fur Products Labeling). 

575Comment of Nat’l Auto. Dealers Ass’n, Doc. 

No. FTC–2022–0046–8368 at 12 n.43 (indicating 

15.3% (18.2%) for new (used) vehicles). These rates 

were weighted by transactions counts to calculate 

an overall rate of 17%. 

576Our review of dealer transaction records 

suggests that a typical transaction generates 3.4 MB 

of data under the status quo. Given the average 

number of transactions per dealer, this suggests that 

storing all these records would require dedicated 

space of roughly 4.2 GB per year. With a two-year 

retention window, this corresponds to 8.4 GB of 

storage at any given time. We estimate that the 

(annual) amount budgeted here should be sufficient 

to maintain at least 1 TB of storage—either on 

premises or through a cloud storage vendor—which 

is sufficient for more than 100 times the data 

storage capacity necessary to retain all transaction 

files generated by a typical dealership in a year 

under the status quo. The Commission anticipates 

that this amount of data storage capacity will be 

more than sufficient to also allow for dealers to 

keep any necessary records of correspondence with 

consumers who ultimately do not complete 

transactions at the dealership. 

tailored to individual industries and 

markets.574

As such, the Commission’s final 

analysis retains its preliminary 

estimates—appropriately updated where 

more recent data were available—with a 

few changes. First, we made 

adjustments to the cost estimates 

associated with the required loan-tovalue calculations for all transactions 

with GAP agreements. Based on a 

comment from one industry group, we 

revised down the share of covered new 

and used vehicle sales with a GAP 

agreement to 17%.575 As in the 

preliminary analysis, for these 

transactions sales staff will spend an 

additional minute to generate and store 

the relevant calculations. As discussed 

in a previous section, the final analysis 

excludes private party, fleet, and 

wholesale transactions. In addition, the 

expansion of the volume of records that 

dealers are required to retain and 

manage will likely require investment in 

additional IT systems and hardware, 

which was left unquantified in the 

preliminary analysis. After additional 

research, the Commission estimates that 

each dealer will need to spend 

approximately $300 per year on storage 

(either on premises or in the cloud) to 

house the records that the Rule requires 

them to maintain. Based on a review of 

the transaction records we have 

received from dealers through 

investigations, this amount is likely to 

be more than sufficient for 

compliance.576

TABLE 3.6—ESTIMATED COMPLIANCE COSTS FOR RECORDKEEPING

2024 only 2024–2033 

Updating systems: 

Number of dealers ........................................... ................................................................................. 47,271 ..............................

Programming hours per dealer ....................... ................................................................................. 8 ..............................

Cost per hour of programming ........................ ................................................................................. $40.24 ..............................

Clerical hours per dealer ................................. ................................................................................. 5 ..............................

Cost per hour of clerical work ......................... ................................................................................. $20.16 ..............................

Sales manager hours per dealer ..................... ................................................................................. 1 ..............................

Cost per hour of sales manager review .......... ................................................................................. $80.19 ..............................

Compliance manager hours per dealer ........... ................................................................................. 1 ..............................

Cost per hour of compliance review ................ ................................................................................. $31.21 ..............................

Subtotal .................................................... ................................................................................. $25,248,387 ..............................

Hardware and Storage (per year): 

Number of dealers ........................................... ................................................................................. .............................. 47,271 

Cost of hardware/storage ................................ ................................................................................. .............................. $300 

Recordkeeping (per transaction): 

Number of covered motor vehicle sales .......... ................................................................................. .............................. 31,562,959 

% of sales with GAP agreement a ................... ................................................................................. .............................. 17% 

Number of motor vehicle sales with GAP 

agreement.

................................................................................. .............................. 5,444,502 

Sales staff minutes per transaction ................. ................................................................................. .............................. 1 

Cost per hour of recordkeeping ...................... ................................................................................. .............................. $28.41 

Subtotal .................................................... 3% discount rate .................................................... .............................. $270,444,391 

Subtotal .................................................... 7% discount rate .................................................... .............................. $222,677,967 

Total Cost .......................................... 3% discount rate .................................................... .............................. $295,692,777 

Total Cost .......................................... 7% discount rate .................................................... .............................. $247,926,354 

Note: In scenarios with ongoing expenses, costs have been discounted to the present at both 3% and 7% rates. a Comment of Nat’l Auto. Dealers Ass’n, Doc. No. FTC–2022–0046–8368 at 12 n.43. 

D. Other Impacts of Final Rule 

As the status quo in this industry 

features consumer search frictions, 

shrouded prices, deception, and 

obfuscation, dealers likely charge higher 

prices for a number of products and 

services than could be supported once 

the Rule is in effect. SBP VII.B 

discussed the Commission’s expectation 

that prices are likely to adjust in 

response to the transparency facilitated 

by the Rule, and quantified the benefits 

that result when vehicle quantities 

increase in response to a more 

transparent and less deceptive 

equilibrium. The price changes in the 

new vehicle market discussed in SBP 

VII.B will also have the effect of 

transferring $3.4 billion per year from 

dealers whose conduct under the status 

quo would not have complied with the 

Rule to consumers. In addition, other 

prices may be impacted by the Rule, 

such as used vehicle prices and add-on 

prices. As we have insufficient data to 

predict these price effects, neither the 

transfers associated with these potential 

price changes nor the resulting quantity 

adjustments and deadweight loss 

reductions are quantified in the current 


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688 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

577See Tom Blake et al., ‘‘Price Salience and 

Product Choice,’’ 40 Mktg. Sci. 619–36 (2021), 

https://doi.org/10.1287/mksc.2020.1261. 578See Nat’l Consumer Law Ctr., ‘‘Auto Add-ons 

Add Up: How Dealer Discretion Drives Excessive, 

Inconsistent, and Discriminatory Pricing’’ (Oct. 1, 

2017), https://www.nclc.org/images/pdf/car_sales/ 

report-auto-add-on.pdf; Consumers for Auto 

Reliability and Safety, Comment Letter on Motor 

Vehicle Roundtables, Project No. P104811 at 2–3 

(Apr. 1, 2012), https://www.ftc.gov/sites/default/ 

files/documents/public_comments/publicroundtables-protecting-consumers-sale-and-leasingmotor-vehicles-project-no.p104811-00108/00108- 

82875.pdf (citing a U.S. Department of Defense data 

call summary that found that the vast majority of 

military counselors have clients with auto financing 

problems and cited ‘‘loan packing’’ and yo-yo 

financing as the most frequent auto lending abuses 

affecting servicemembers); Adam J. Levitin, ‘‘The 

Fast and the Usurious: Putting the Brakes on Auto 

Lending Abuses,’’ 108 Geo. L.J. 1257, 1265–66 

(2020), https://www.law.georgetown.edu/ 

georgetown-law-journal/wp-content/uploads/sites/ 

26/2020/05/Levitin_The-Fast-and-the-UsuriousPutting-the-Brakes-on-Auto-Lending-Abuses.pdf 

(discussing ‘‘loan packing’’ as the sale of add-on 

products that are falsely represented as being 

required in order to obtain financing.); Complaint 

¶¶ 12–19, Fed. Trade Comm’n v. Liberty Chevrolet, 

Inc., No. 1:20–cv–03945 (S.D.N.Y. May 21, 2020) 

(alleging deceptive and unauthorized add-on 

charges in consumers’ transactions); Complaint 

¶¶ 59–64, Fed. Trade. Comm’n v. Universal City 

Nissan, No. 2:16–cv–07329 (C.D. Cal. Sept. 29, 

2016) (alleging deceptive and unauthorized add-on 

charges in consumers’ transactions); Complaint 

¶¶ 6, 9, TT of Longwood, Inc., No. C–4531 (F.T.C. 

July 2, 2015) (alleging misrepresentations regarding 

prices for added features); see also Auto Buyer 

Study, supra note 25, at 14 (‘‘Several participants 

who thought that they had not purchased add-ons, 

or that the add-ons were included at no additional 

charge, were surprised to learn, when going through 

the paperwork, that they had in fact paid extra for 

add-ons. This is consistent with consumers’ 

experiencing fatigue during the buying process or 

confusion with a financially complex transaction, 

but would also be consistent with dealer 

misrepresentations.’’). 

analysis. Finally, it may be the case that 

enhanced transparency of the Rule leads 

to fewer of certain types of transactions 

relative to the status quo. Recent 

evidence suggests that price shrouding 

of the kind that is prevalent in the motor 

vehicle market results in consumers 

spending more than they would 

otherwise.577 We expect that this 

phenomenon may extend especially to 

the motor vehicle add-on market, where 

the Commission has compiled 

substantial evidence that individuals 

frequently inadvertently purchase addons that they did not want and 

ultimately will not use.578 While much 

of this effect may ultimately be 

transfers, we reiterate that to the extent 

they represent transfers from dishonest 

dealers to consumers, this may be 

considered a benefit of the Rule. 

In addition, deceptive practices by 

dishonest dealers lead consumers to 

engage with those dealers instead of 

honest dealerships. Once the Rule is in 

effect, some business that would 

otherwise have gone to dealers using 

bait-and-switch tactics or deceptive 

door opening advertisements will now 

go to honest dealerships. Again, 

assuming that the costs of the firms are 

similar, any one-for-one diversion of 

sales from one set of businesses to 

another is generally characterized as a 

transfer under OMB guidelines. 

However, in this case, it would 

represent a transfer from the set of 

dishonest dealers to honest dealers, 

which may weigh differently if profits 

from law violations are not counted 

towards social welfare in the regulatory 

analysis. 

E. Conclusion 

The Commission has attempted to 

catalog and quantify the incremental 

benefits and costs of the provisions 

included in the Final Rule. 

Extrapolating these benefits over the 10- 

year assessment period and discounting 

to the present provides an estimate of 

the present value for total benefits and 

costs of the Rule, with the difference— 

net benefits—providing one measure of 

the value of regulation. 

Using our base case estimates, the 

present value of quantified benefits for 

consumers from the Rule’s requirements 

over a 10-year period using a 7% 

discount rate is estimated at $13.4 

billion. The present value of quantified 

costs for covered motor vehicle dealers 

of complying with the Rule’s 

requirements over a 10-year period 

using a 7% discount rate is estimated at 

$1.1 billion. This generates an estimate 

of the present value of quantified net 

benefits equal to $12.3 billion using a 

discount rate of 7%. Using the best (or 

worst) case assumptions discussed in 

the preceding analysis results in net 

benefits of $21.2 billion (or $5.5 billion) 

using a discount rate of 7%. 

Given that we expect unquantified 

benefits to outweigh unquantified costs 

for this Rule, this regulatory analysis 

indicates that adoption of the Rule 

would result in benefits to the public 

that outweigh the costs. 

PRESENT VALUE OF NET BENEFITS (IN MILLIONS), 2024–2033 

Low estimate Base case High estimate 

3% Discount 

rate 

7% Discount 

rate 

3% Discount 

rate 

7% Discount 

rate 

3% Discount 

rate 

7% Discount 

rate 

Benefits: 

Time Savings .................................... $7,463 $6,145 $14,926 $12,290 $24,036 $19,790 

Deadweight Loss Reduction ............. 568 468 1,298 1,069 2,307 1,899 

Total Benefits ............................. 8,031 6,613 16,224 13,359 26,343 21,690 

Costs: 

Finance/Lease Total of Payments 

Disclosure ...................................... 296 246 296 246 117 98 

Offering Price Disclosure .................. 46 46 46 46 0 0 

Prohibition Re Certain Add-ons & 

Express, Informed Consent .......... 475 406 475 406 147 128 

Prohibition on Misrepresentations .... 157 130 157 130 0 0 

Recordkeeping .................................. 296 248 296 248 296 248 

Total Costs ................................ 1,270 1,075 1,270 1,075 559 474 

Net Benefits ............................... 6,761 5,538 14,954 12,284 25,784 21,216 

Note: ‘‘Low Estimate’’ reflects all lowest benefit estimates and high cost scenarios and ‘‘High Estimate’’ reflects all highest benefit estimates 

and low cost scenarios. ‘‘Base Case’’ reflects base case benefit estimates and high cost scenarios. Not all impacts can be quantified; estimates 

only reflect quantified costs and benefits. 


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579See Henrik J. Kleven, ‘‘Sufficient Statistics 

Revisited.’’ 13 Annual Rev. Econ. 515–38. (2021), 

https://doi.org/10.1146/annurev-economics-060220- 

023547. 

F. Appendix: Derivation of Deadweight 

Loss Reduction 

The derivation of the formula for the 

reduction in deadweight loss from the 

Rule follows from ‘‘Sufficient Statistics 

Revisited’’ by Henrik Kleven.579 In the 

source article, the wedge between costs 

and prices is tax rates, but here we 

consider producer markups; the 

fundamental principles are unchanged. 

We have a mass of consumers i with 

utility function ui

(xi

O, xiN, xiU) over new 

cars, used cars, and the numeraire (good 

0) who face the following budget 

constraint: 

given markups Ti

j for good j and 

consumer i and income Yi for consumer 

i. Pre-markup prices are normalized to 

one so xij is the cost of consumer i’s 

purchase of good j. Total profits from 

the consumption of consumer i are Ti = 

SjTi

jx ij. 

Define a policy to be evaluated as q. 

Total welfare is defined as: 

Here, vi(q) is the indirect utility 

function for consumer i, so the first term 

is consumer surplus and the second 

term is producer surplus, while m is the 

value of a dollar of profit. The change 

in welfare from policy q, translated into 

dollars by dividing by m, is: 

The first term is the total effect on 

profit from the reform and the second 

term is the ‘‘mechanical’’ effect; 

assuming quantities stay constant, how 

much profits will fall if the policy goes 

into effect. We can rewrite this as 

follows: 

Where 

is labelled the ‘‘policy elasticity’’ for 

good and consumer with respect to 

policy . We make the following 

additional assumptions/simplifications: 

1. The outside good is priced at cost. 

2. All consumers face the same 

markups so Ti

k = Tk. 

3. For simplicity, all elasticities are 

assumed to be cost share-weighted 

averages of individual effects, so 

As a result, the welfare change from 

the Auto Rule (q) is: 

Assuming that the Rule affects only 

markups for new vehicles, we can 

rewrite the ‘‘policy elasticities’’ as a 

product of a price elasticity and the 

elasticity of price with respect to the 

Rule, as follows: 

where 

is the long-run ‘‘policy price elasticity’’ 

of demand for good w.r.t. the price of 

good , including the effects that a price 

change has on the prices of related 

goods. The formula accounts for 

demand feedback effects between the 

new and used car markets but assumes 

no dynamics in the path from the policy 

to the long-run steady-state. Computing 

this formula requires estimates of seven 

parameters: two ‘‘policy price 

elasticities’’ that reflect the 

responsiveness of quantities of new and 

used vehicles sold to a change in prices 

in the new vehicle market after all 

adjustments have occurred in both 

markets, two baseline markups that 

represent the differences between prices 

and marginal costs for new/used 

vehicles, two quantities that reflect the 

aggregate cost of all new/used vehicles 

sold under the status quo, and the 

predicted change in prices due to the 

Rule. Calibration of these parameters is 

discussed in the main text. 

G. Appendix: Uncertainty Analysis 

While the main text uses alternative 

assumptions to explore sensitivity to a 


khammond on DSKJM1Z7X2PROD with RULES2ER04JA24.003</GPH> ER04JA24.004</GPH> ER04JA24.005</GPH> ER04JA24.006</GPH> ER04JA24.007</GPH> ER04JA24.008</GPH> ER04JA24.009</GPH> ER04JA24.010</GPH> ER04JA24.011</GPH>

" d logXj 

Ejk = dlog(1Hk) 

L (1 + rj)xj = yi 

j 

dW(0)/d0 _ f dTi _ ari . 

μ - i de ae di 

dW(0)/d0 _ f [f i id logxj 1 . - . L, rixi de di 

μ i j=O 
690 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

number of discrete scenarios, in this 

appendix we allow variation in most of 

the assumptions that underlie our 

model. This Monte Carlo analysis 

procedure allows us to more fully 

characterize the uncertainty around our 

central estimate of net benefits, under 

the assumption that our basic model is 

specified correctly. Most of the 

assumptions in our analysis refer to 

amounts of time, either amounts of time 

dealerships employees must spend on a 

compliance task or amounts of time that 

consumers save on various activities 

related to the automobile shopping 

process. Deviations for these 

assumptions are centered on the 

parameters used in the main text. 

Elsewhere, as with assumptions 

regarding fractions or proportions, our 

base case is often an extreme case (i.e., 

0 or 1). In these cases, deviations are 

typically not centered on the base case 

and are allowed to vary across the 

whole range as dictated by the 

parameter. Still, we can expect the 

average results from this sensitivity 

analysis to be similar to the result in the 

main text. The object of interest here is 

the distribution of estimates, which 

indicates the expected variation in net 

benefits if the true parameters deviate 

from our predictions (with errors of the 

form modeled). 

For most assumptions, we draw from 

a symmetric, triangular distribution 

around the base case assumption with a 

specified upper and lower bound. In 

this distribution, the probability of 

drawing particular parameter value 

increases linearly from the lower bound 

to the base case assumption before 

decreasing linearly to the upper bound, 

such that the area inscribed by the 

triangle is equal to 1. We emphasize this 

distribution because it is a parsimonious 

way to incorporate variation in 

parameter values over a finite range and 

incorporates our preferred estimates as 

the most likely outcome. For a few 

parameters where we think it is 

appropriate to de-emphasize the main 

estimate parameter, we draw from a 

uniform distribution. Importantly, all 

draws are independent; there is no 

correlation between the deviations 

drawn in any given Monte Carlo trial. 

An additional sensitivity analysis 

considers a situation where our errors 

across all labor time parameters are 

correlated; specifically, that all of our 

estimates of the time required for 

compliance tasks are 1/10th of the true 

time required. 

To incorporate uncertainty in time 

savings benefits to consumers, we allow 

the time saved by digital consumers to 

vary by up to ten minutes more or less 

than the main analysis parameters. The 

share of these time savings received by 

non-digital consumers under the Rule is 

modeled as uniformly distributed 

between zero (no savings) and one 

(savings equivalent to what digital 

consumers receive in the status quo). 

TABLE A.1—ALTERNATIVE PARAMETERS: BENEFITS OF TIME SAVINGS FOR COMPLETED TRANSACTIONS

Base case Monte Carlo 

Parameter Parameter value Modeled distribution Distribution lower 

bound 

Distribution upper 

bound 

Price Negotiation Time Savings .................................. 43 Triangular ......................... 33 53 

Add-on Negotiation Time Savings .............................. 33 Triangular ......................... 23 43 

Paperwork Time Savings ............................................ 45 Triangular ......................... 35 55 

Trade-In Negotiation Time Savings ............................ 26 Triangular ......................... 16 36 

Fraction of Price Time Savings Under Rule ............... 1.0 Uniform ............................. 0 1 

Fraction of Add-on Time Savings Under Rule ............ 0.5 Uniform ............................. 0 1 

Fraction of Paperwork Time Savings Under Rule ...... 0.5 Uniform ............................. 0 1 

Fraction of Trade-In Time Savings Under Rule .......... 0.0 Uniform ............................. 0 1 

For the deadweight loss reduction 

component of benefits, we explore 

sensitivity only to baseline used-vehicle 

markups, allowing them to vary from 0 

to the baseline new-vehicle markup of 

15%. In the main text, we explore a 

number of scenarios for deadweight loss 

reduction corresponding to greater and 

lesser demand elasticities as well. 

The following tables describe the 

distributions we model for cost 

parameters in the simulation exercise. 

All cost parameters are assumed to be 

drawn from triangular distributions. The 

tables follow the same order as the 

discussion in the main text. 

TABLE A.2—ALTERNATIVE PARAMETERS: COSTS OF MISREPRESENTATION PROHIBITION COMPLIANCE

Base case Monte Carlo 

Parameter Parameter value Modeled distribution Distribution lower 

bound 

Distribution upper 

bound 

Document Review Minutes ......................................... 5 Triangular ......................... 0 10 

Documents Reviewed ................................................. 150 Triangular ......................... 100 200 

TABLE A.3—ALTERNATIVE PARAMETERS: COSTS OF OFFERING PRICE DISCLOSURES

Base case Monte Carlo 

Parameter Parameter value Modeled distribution Distribution lower 

bound 

Distribution upper 

bound 

Template Creation Sales Manager Hours .................. 8 Triangular ......................... 4 12 

Template Creation Web Developer Hours .................. 8 Triangular ......................... 4 12 


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Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 691 

TABLE A.5—ALTERNATIVE PARAMETERS: COSTS OF FINANCING DISCLOSURES

Base case Monte Carlo 

Parameter Parameter value Modeled distribution Distribution lower 

bound 

Distribution upper 

bound 

Disclosure Creation Compliance Manager Hours ...... 8 Triangular ......................... 4 12 

Disclosure Training Hours ........................................... 1 Triangular ......................... 0 2 

Disclosure Delivery Time Minutes .............................. 2 Triangular ......................... 0 4 

Printing Costs .............................................................. 0.15 Triangular ......................... 0.10 0.20 

TABLE A.6—ALTERNATIVE PARAMETERS: COSTS OF ITEMIZED DISCLOSURES

Base case Monte Carlo 

Parameter Parameter value Modeled distribution Distribution lower 

bound 

Distribution upper 

bound 

Electronic Disclosure Share (Scenario 2 only) ........... 0.27 Triangular ......................... 0.04 0.50 

Upfront Sales Manager Hours (Scenario 1) ............... 8 Triangular ......................... 4 12 

Upfront Compliance Manager Hours (Scenario 1) ..... 8 Triangular ......................... 4 12 

Disclosure Training Hours (Scenario 1) ...................... 1 Triangular ......................... 0 2 

Disclosure Creation Sales Manager Hours (Scenario 

2 only).

4 Triangular ......................... 2 6 

Disclosure Creation Compliance Manager Hours 

(Scenario 2 only).

8 Triangular ......................... 4 12 

Disclosure Creation Web Developer Hours (Scenario 

2 only).

8 Triangular ......................... 4 12 

Disclosure Delivery Minutes (Scenario 2 only) ........... 2 Triangular ......................... 0 4 

Printing Costs (Scenario 2 only) ................................. 0.15 Triangular ......................... 0.10 0.20 

Electronic Disclosure Costs (Scenario 2 only) ........... 0.02 Triangular ......................... 0 0.04 

TABLE A.7—ALTERNATIVE PARAMETERS: RECORDKEEPING COSTS

Base case Monte Carlo 

Parameter Parameter value Modeled distribution Distribution lower 

bound 

Distribution upper 

bound 

GAP Sales Share ........................................................ 0.17 Triangular ......................... 0.07 0.27 

GAP Sale Minutes ....................................................... 1 Triangular ......................... 0 2 

Upfront Web Developer Hours .................................... 8 Triangular ......................... 4 12 

Upfront Clerical Hours ................................................. 5 Triangular ......................... 2 8 

Upfront Sales Manager Hours .................................... 1 Triangular ......................... 0 2 

Upfront Compliance Manager Hours .......................... 1 Triangular ......................... 0 2 

IT Hardware Costs ...................................................... 300 Triangular ......................... 100 500 

We simulate 1,000 scenarios drawing 

from these parameter distributions, 

recording the costs and benefits of each 

potential outcome. The distribution of 

costs and benefits is plotted in the 

following table for discount rates of 3% 

and 7%. 


khammond on DSKJM1Z7X2PROD with RULES2
692 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

Differencing the costs and benefits 

from each simulation iteration yields a 

distribution of net benefits under the 

various parameter draws. We again plot 

this distribution under 3% and 7% 

discount rates. 

This exercise finds heterogeneity in 

net benefits under the alternative 

parameter distributions, but the Rule 

still yields positive net benefits in all 

simulated outcomes. 

Finally, to examine the sensitivity of 

the net benefits conclusions to the 

possibility of systematic 

underestimating of labor costs, we 

calculate costs and benefits in a scenario 

where all labor costs turn out to be ten 


khammond on DSKJM1Z7X2PROD with RULES2ER04JA24.012</GPH> ER04JA24.013</GPH>

Distribution of Benefits and Costs 

Monte Carlo Simulation, n=1000 

1 

I 

20.00-+----+-1 ----------------·--

I -,--

1 

1--.l--1 

C

'·" 15.00--·-·~·1·- ,----------------,--, .. , • __ ~ Benefits 

.2 }-----{ ,--.l--a CJ Costs 

a:i I I I I 

J .... ----f 

fa- 10.00 .... --:-- -__, ,------

I "'"-,--' I I 

: I 

5,00----.~-----------:------- __ . __ _ .... ___ 

0.00----------------------

3% discount rate 7% discount rate 

Distribution ·of Net Benefits 

Monte Carfo Simulation, n=1000 ........ _i ... , . . 1-------------""----------···-··-·-··---

/ ·,. 

/ ~ 

I \ I ·, 

I \ 

:E' I \ 

~ I \ 

~ .05 -··-·-----~,. ··-----·---~\.---

/ \ 

i \ i \ / \ 

I \ 

✓ ~ ' • ,: , ..... 

0.00. 5.00 10.00 15.00 20.00 

Net Benefit {$Billions) 

- 3% discount rate - • - , 7% discount rate 

25.00 
Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 693 

times larger than the parameter values 

in the main text. All non-labor hours 

costs (including benefits hours, wage 

rates, and prevalence counts) are 

unchanged in this analysis. 

TABLE A.8—PRESENT VALUE OF NET BENEFITS (IN MILLIONS), LABOR COSTS × 10, 2024–2033 

Base case 

3% Discount rate 7% Discount rate 

Benefits: 

Time savings .................................................................................................................................... $14,926 $12,290 

Deadweight Loss Reduction ............................................................................................................. 1,298 1,069 

Total Benefits ............................................................................................................................ 16,224 13,359 

Costs: 

Prohibition on Misrepresentations .................................................................................................... 1,573 1,295 

Offering Price Disclosure .................................................................................................................. 455 455 

Finance/Lease Total of Payments Disclosure .................................................................................. 2,743 2,279 

Prohibition re: Certain Add-ons & Express, Informed Consent ....................................................... 4,471 3,830 

Recordkeeping .................................................................................................................................. 1,868 1,583 

Total Costs ................................................................................................................................ 11,111 9,443 

Net Benefits ............................................................................................................................... 5,114 3,916 

Note: ‘‘Base Case’’ reflects base case benefit estimates and high cost scenarios with ten times the labor costs as in the main analysis. Not all 

impacts can be quantified; estimates only reflect quantified costs and benefits. 

VIII. Other Matters 

Pursuant to the Congressional Review 

Act (5 U.S.C. 801 et seq.), the Office of 

Information and Regulatory Affairs 

designated this Rule as a ‘‘major rule,’’ 

as defined by 5 U.S.C. 804(2). 

List of Subjects in 16 CFR Part 463 

Consumer protection, Motor vehicles, 

Reporting and recordkeeping 

requirements, Trade practices. 

■ For the reasons stated in the preamble, 

the Federal Trade Commission adds part 

463 to subchapter D of Title 16 of the 

Code of Federal Regulations to read as 

follows: 

PART 463—COMBATING AUTO 

RETAIL SCAMS TRADE REGULATION 

RULE 

Sec. 

463.1 Authority. 

463.2 Definitions. 

463.3 Prohibited misrepresentations. 

463.4 Disclosure requirements. 

463.5 Dealer charges for Add-ons and other 

items. 

463.6 Recordkeeping. 

463.7 Waiver not permitted. 

463.8 Severability. 

463.9 Relation to State laws. 

Authority: 15 U.S.C. 41 et seq.; 12 U.S.C. 

5519. 

§ 463.1 Authority. 

This part is promulgated pursuant to 

section 1029 of the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act of 2010, 12 U.S.C. 5519(d). It is an 

unfair or deceptive act or practice 

within the meaning of section 5(a)(1) of 

the Federal Trade Commission Act (15 

U.S.C. 45(a)(1)) to violate any applicable 

provision of this part, directly or 

indirectly, including the recordkeeping 

requirements which are necessary to 

prevent such unfair or deceptive acts or 

practices and to enforce this part. 

§ 463.2 Definitions. 

(a) ‘‘Add-on’’ or ‘‘Add-on product(s) 

or Service(s)’’ means any product(s) or 

service(s) not provided to the consumer 

or installed on the Vehicle by the 

Vehicle manufacturer and for which the 

Dealer, directly or indirectly, charges a 

consumer in connection with a Vehicle 

sale, lease, or financing transaction. 

(b)–(c) [Reserved] 

(d) ‘‘Clear(ly) and Conspicuous(ly)’’ 

means in a manner that is difficult to 

miss (i.e., easily noticeable) and easily 

understandable, including in all of the 

following ways: 

(1) In any communication that is 

solely visual or solely audible, the 

disclosure must be made through the 

same means through which the 

communication is presented. In any 

communication made through both 

visual and audible means, such as a 

television advertisement, the disclosure 

must be presented simultaneously in 

both the visual and audible portions of 

the communication even if the 

representation requiring the disclosure 

is made in only one means. 

(2) A visual disclosure, by its size, 

contrast, location, the length of time it 

appears, and other characteristics, must 

stand out from any accompanying text 

or other visual elements so that it is 

easily noticed, read, and understood. 

(3) An audible disclosure, including 

by telephone or streaming video, must 

be delivered in a volume, speed, and 

cadence sufficient for ordinary 

consumers to easily hear and 

understand it. 

(4) In any communication using an 

interactive electronic medium, such as 

the internet or software, the disclosure 

must be unavoidable. 

(5) The disclosure must use diction 

and syntax understandable to ordinary 

consumers and must appear in each 

language in which the representation 

that requires the disclosure appears. 

(6) The disclosure must comply with 

these requirements in each medium 

through which it is received. 

(7) The disclosure must not be 

contradicted or mitigated by, or 

inconsistent with, anything else in the 

communication. 

(e) ‘‘Covered Motor Vehicle’’ or 

‘‘Vehicle’’ means any self-propelled 

vehicle designed for transporting 

persons or property on a public street, 

highway, or road. For purposes of this 

part, the term Covered Motor Vehicle 

does not include the following: 

(1) Recreational boats and marine 

equipment; 

(2) Motorcycles, scooters, and electric 

bicycles; 

(3) Motor homes, recreational vehicle 

trailers, and slide-in campers; or 

(4) Golf carts. 

(f) ‘‘Covered Motor Vehicle Dealer’’ or 

‘‘Dealer’’ means any person, including 

any individual or entity, or resident in 

the United States, or any territory of the 

United States, that: 


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694 Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 

(1) Is licensed by a State, a territory 

of the United States, or the District of 

Columbia to engage in the sale of 

Covered Motor Vehicles; 

(2) Takes title to, holds an ownership 

interest in, or takes physical custody of 

Covered Motor Vehicles; and 

(3) Is predominantly engaged in the 

sale and servicing of Covered Motor 

Vehicles, the leasing and servicing of 

Covered Motor Vehicles, or both. 

(g) ‘‘Express, Informed Consent’’ 

means an affirmative act communicating 

unambiguous assent to be charged, 

made after receiving and in close 

proximity to a Clear and Conspicuous 

disclosure, in writing, and also orally 

for in-person transactions, of the 

following: 

(1) What the charge is for; and 

(2) The amount of the charge, 

including, if the charge is for a product 

or service, all fees and costs to be 

charged to the consumer over the period 

of repayment with and without the 

product or service. The following are 

examples of what does not constitute 

Express, Informed Consent: 

(i) A signed or initialed document, by 

itself; 

(ii) Prechecked boxes; or 

(iii) An agreement obtained through 

any practice designed or manipulated 

with the substantial effect of subverting 

or impairing user autonomy, decisionmaking, or choice. 

(h) ‘‘GAP Agreement’’ means an 

agreement to indemnify a Vehicle 

purchaser or lessee for any of the 

difference between the actual cash value 

of the Vehicle in the event of an 

unrecovered theft or total loss and the 

amount owed on the Vehicle pursuant 

to the terms of a loan, lease agreement, 

or installment sales contract used to 

purchase or lease the Vehicle, or to 

waive the unpaid difference between 

money received from the purchaser’s or 

lessee’s Vehicle insurer and some or all 

of the amount owed on the Vehicle at 

the time of the unrecovered theft or total 

loss, including products or services 

otherwise titled ‘‘Guaranteed 

Automobile Protection Agreement,’’ 

‘‘Guaranteed Asset Protection 

Agreement,’’ ‘‘GAP insurance,’’ or ‘‘GAP 

Waiver.’’ 

(i) ‘‘Government Charges’’ means all 

fees or charges imposed by a Federal, 

State, or local government agency, unit, 

or department, including taxes, license 

and registration costs, inspection or 

certification costs, and any other such 

fees or charges. 

(j) ‘‘Material’’ or ‘‘Materially’’ means 

likely to affect a person’s choice of, or 

conduct regarding, goods or services. 

(k) ‘‘Offering Price’’ means the full 

cash price for which a Dealer will sell 

or finance the Vehicle to any consumer, 

provided that the Dealer may exclude 

only required Government Charges. 

§ 463.3 Prohibited misrepresentations. 

It is a violation of this part and an 

unfair or deceptive act or practice in 

violation of section 5 of the Federal 

Trade Commission Act for any Covered 

Motor Vehicle Dealer to make any 

misrepresentation, expressly or by 

implication, regarding Material 

information about the following: 

(a) The costs or terms of purchasing, 

financing, or leasing a Vehicle. 

(b) Any costs, limitation, benefit, or 

any other aspect of an Add-on Product 

or Service. 

(c) Whether the terms are, or 

transaction is, for financing or a lease. 

(d) The availability of any rebates or 

discounts that are factored into the 

advertised price but not available to all 

consumers. 

(e) The availability of Vehicles at an 

advertised price. 

(f) Whether any consumer has been or 

will be preapproved or guaranteed for 

any product, service, or term. 

(g) Any information on or about a 

consumer’s application for financing. 

(h) When the transaction is final or 

binding on all parties. 

(i) Keeping cash down payments or 

trade-in Vehicles, charging fees, or 

initiating legal process or any action if 

a transaction is not finalized or if the 

consumer does not wish to engage in a 

transaction. 

(j) Whether or when a Dealer will pay 

off some or all of the financing or lease 

on a consumer’s trade-in Vehicle. 

(k) Whether consumer reviews or 

ratings are unbiased, independent, or 

ordinary consumer reviews or ratings of 

the Dealer or the Dealer’s products or 

services. 

(l) Whether the Dealer or any of the 

Dealer’s personnel or products or 

services is or was affiliated with, 

endorsed or approved by, or otherwise 

associated with the United States 

government or any Federal, State, or 

local government agency, unit, or 

department, including the United States 

Department of Defense or its Military 

Departments. 

(m) Whether consumers have won a 

prize or sweepstakes. 

(n) Whether, or under what 

circumstances, a Vehicle may be moved, 

including across State lines or out of the 

country. 

(o) Whether, or under what 

circumstances, a Vehicle may be 

repossessed. 

(p) Any of the required disclosures 

identified in this part. 

(q) The requirements in this section 

also are prescribed for the purpose of 

preventing the unfair or deceptive acts 

or practices defined in this part, 

including those in §§ 463.4 and 463.5. 

§ 463.4 Disclosure requirements. 

It is a violation of this part and an 

unfair or deceptive act or practice in 

violation of section 5 of the Federal 

Trade Commission Act for any Covered 

Motor Vehicle Dealer to fail to make any 

disclosure required by this section, 

Clearly and Conspicuously. 

(a) Offering Price. In connection with 

the sale or financing of Vehicles, a 

Vehicle’s Offering Price must be 

disclosed: 

(1) In any advertisement that 

references, expressly or by implication, 

a specific Vehicle; 

(2) In any advertisement that 

represents, expressly or by implication, 

any monetary amount or financing term 

for any Vehicle; and 

(3) In any communication with a 

consumer that includes a reference, 

expressly or by implication, regarding a 

specific Vehicle, or any monetary 

amount or financing term for any 

Vehicle. With respect to such 

communications: 

(i) The Offering Price for the Vehicle 

must be disclosed in the Dealer’s first 

response regarding that specific Vehicle 

to the consumer; and 

(ii) If the communication or response 

is in writing, the Offering Price must be 

disclosed in writing. The requirements 

in this paragraph (a) also are prescribed 

for the purpose of preventing the unfair 

or deceptive acts or practices defined in 

this part, including those in §§ 463.3(a) 

and (b) and 463.5(c). 

(b) [Reserved] 

(c) Add-ons not required. When 

making any representation, expressly or 

by implication, directly or indirectly, 

about an Add-on Product or Service, the 

Dealer must disclose that the Add-on is 

not required and the consumer can 

purchase or lease the Vehicle without 

the Add-on, if true. If the representation 

is in writing, the disclosure must be in 

writing. The requirements in this 

paragraph (c) also are prescribed for the 

purpose of preventing the unfair or 

deceptive acts or practices defined in 

this part, including those in §§ 463.3(a) 

and (b) and 463.5(c). 

(d) Total of payments and 

consideration for a financed or lease 

transaction. (1) When making any 

representation, expressly or by 

implication, directly or indirectly, about 

a monthly payment for any Vehicle, the 

Dealer must disclose the total amount 

the consumer will pay to purchase or 

lease the Vehicle at that monthly 

payment after making all payments as 

scheduled. If the representation is in 


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Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Rules and Regulations 695 

writing, the disclosure must be in 

writing. 

(2) If the total amount disclosed 

assumes the consumer will provide 

consideration (for example, in the form 

of a cash down payment or trade-in 

valuation), the Dealer must disclose the 

amount of consideration to be provided 

by the consumer. If the representation is 

in writing, the disclosure must be in 

writing. 

(3) The requirements in this 

paragraph (d) also are prescribed for the 

purpose of preventing the unfair or 

deceptive acts or practices defined in 

this part, including those in §§ 463.3(a) 

and 463.5(c). 

(e) Monthly payments comparison. 

When making any comparison between 

payment options, expressly or by 

implication, directly or indirectly, that 

includes discussion of a lower monthly 

payment, the Dealer must disclose that 

the lower monthly payment will 

increase the total amount the consumer 

will pay to purchase or lease the 

Vehicle, if true. If the representation is 

in writing, the disclosure must be in 

writing. The requirements in this 

paragraph (e) also are prescribed for the 

purpose of preventing the unfair or 

deceptive acts or practices defined in 

this part, including those in §§ 463.3(a) 

and 463.5(c). 

§ 463.5 Dealer charges for Add-ons and 

other items. 

It is a violation of this part and an 

unfair or deceptive act or practice in 

violation of section 5 of the Federal 

Trade Commission Act for any Covered 

Motor Vehicle Dealer, in connection 

with the sale or financing of Vehicles, 

to charge for any of the following. 

(a) Add-ons that provide no benefit. A 

Dealer may not charge for an Add-on 

Product or Service if the consumer 

would not benefit from such an Add-on 

Product or Service, including: 

(1) Nitrogen-filled tire-related 

products or services that contain no 

more nitrogen than naturally exists in 

the air; or 

(2) Products or services that do not 

provide coverage for the Vehicle, the 

consumer, or the transaction or that are 

duplicative of warranty coverage for the 

Vehicle, including a GAP Agreement if 

the consumer’s Vehicle or neighborhood 

is excluded from coverage or the loanto-value ratio would result in the 

consumer not benefiting financially 

from the product or service. 

(3) The requirements in this 

paragraph (a) also are prescribed for the 

purpose of preventing the unfair or 

deceptive acts or practices defined in 

this part, including those in § 463.3(a) 

and (b) and paragraph (c) of this section. 

(b) [Reserved] 

(c) Any item without Express, 

Informed Consent. A Dealer may not 

charge a consumer for any item unless 

the Dealer obtains the Express, Informed 

Consent of the consumer for the charge. 

The requirements in this paragraph (c) 

also are prescribed for the purpose of 

preventing the unfair or deceptive acts 

or practices defined in this part, 

including those in §§ 463.3(a) and (b), 

463.4, and paragraph (a) of this section. 

§ 463.6 Recordkeeping. 

(a) Any Covered Motor Vehicle Dealer 

subject to this part must create and 

retain, for a period of twenty-four 

months from the date the record is 

created, all records necessary to 

demonstrate compliance with this part, 

including the following records: 

(1) Copies of all Materially different 

advertisements, sales scripts, training 

materials, and marketing materials 

regarding the price, financing, or lease 

of a Vehicle, that the Dealer 

disseminated during the relevant time 

period; Provided that a typical example 

of a credit or lease advertisement may 

be retained for advertisements that 

include different Vehicles, or different 

amounts for the same credit or lease 

terms, where the advertisements are 

otherwise not Materially different; 

(2) [Reserved] 

(3) Copies of all purchase orders; 

financing and lease documents with the 

Dealer signed by the consumer, whether 

or not final approval is received for a 

financing or lease transaction; and all 

written communications relating to 

sales, financing, or leasing between the 

Dealer and any consumer who signs a 

purchase order or financing or lease 

contract with the Dealer; 

(4) Records demonstrating that Addons in consumers’ contracts meet the 

requirements of § 463.5, including 

copies of all service contracts, GAP 

Agreements and calculations of loan-tovalue ratios in contracts including GAP 

Agreements; and 

(5) Copies of all written consumer 

complaints relating to sales, financing, 

or leasing, inquiries related to Add-ons, 

and inquiries and responses about 

Vehicles referenced in § 463.4. 

(b) Any Dealer subject to this part may 

keep the records required by paragraph 

(a) of this section in any legible form, 

and in the same manner, format, or 

place as they may already keep such 

records in the ordinary course of 

business. Failure to keep all records 

required under paragraph (a) of this 

section will be a violation of this part. 

§ 463.7 Waiver not permitted. 

It is a violation of this part for any 

person to obtain, or attempt to obtain, a 

waiver from any consumer of any 

protection provided by or any right of 

the consumer under this part. 

§ 463.8 Severability. 

The provisions of this part are 

separate and severable from one 

another. If any provision is stayed or 

determined to be invalid, it is the 

Commission’s intention that the 

remaining provisions will continue in 

effect. 

§ 463.9 Relation to State laws. 

(a) In general. This part will not be 

construed as superseding, altering, or 

affecting any other State statute, 

regulation, order, or interpretation 

relating to Covered Motor Vehicle 

Dealer requirements, except to the 

extent that such statute, regulation, 

order, or interpretation is inconsistent 

with the provisions of this part, and 

then only to the extent of the 

inconsistency. 

(b) Greater protection under State law. 

For purposes of this section, a State 

statute, regulation, order, or 

interpretation is not inconsistent with 

the provisions of this part if the 

protection such statute, regulation, 

order, or interpretation affords any 

consumer is greater than the protection 

provided under this part. 

By direction of the Commission. 

Joel Christie, 

Acting Secretary. 

[FR Doc. 2023–27997 Filed 12–28–23; 8:45 am] 

BILLING CODE P 


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